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AFTER FORTY YEARS OF SILENCE, THE TRUTH CAN
BE TOLD! “ONE OF THE MOST SHOCKING BOOKS

OF THE YEAR .’’-THE NEW YORK TIMES

An Expose of the Nazi-American
Money Plot 1933-1949

CHARLES HIGHAM

Herbert S. Matsen
H. C. R. 01 • Bo* 10
Bickleton, Wa 99322
U.S.A.

d 4 1993

“A DISTURBING BOOK. . . . HIGHAM HAS THE
CREDENTIALS TO SUPPORT HIS CHARGES.”

—The Seattle Times

“WRITTEN IN FACTUAL, WELL-DOCUMENTED
DISPASSION, BUT NO READER WILL BE ABLE
TO KEEP HIS COOL.” — The Jewish News

From the Standard Oil executives who diverted precious
fuel to the enemy and the Ford Motor Company plants
that supplied trucks to keep the German war machine
running, to the ITT executives who streamlined Nazi
communications and helped perfect the robot bombs that
devastated London; from the Chase National Bank execu¬
tives who held millions of dollars in gold—some of it
refined from the fires of Auschwitz—in trust for the Reich
at war’s end, to the top-ranking government officials who
kept their deals running smoothly—here is the shocking
story of. . .

TRADING WITH THE ENEMY

An Expose of the Nazi-American Money
Plot 1933-1949

“HARROWING, WELL-DOCUMENTED
[READERS] ARE LIKELY TO COME AWAY FROM
THIS BOOK WITH A QUESTION . . . NAMELY, IF
THIS COULD HAPPEN THEN, WHAT PREVENTS
IT FROM HAPPENING AGAIN?"

—The Pittsburgh Press

“EXPLOSIVE. . . . The account of a single company, no
matter how immense, doesn’t begin to cover the breadth
of Higham’s work, which names names and delves into the
pro-facist leanings of many top U.S. executives and offi¬
cials. . . . The scope of Nazi-American connections re¬
vealed by Higham... is still, after so many years, not fully
known.” — The Village Voice

“MORE SHOCKING THAN FICTION COULD BE.
... A DISTURBING HISTORY OF TREASON AND
SEDITION. . . . The list of [those involved] reads like a
Who’s Who of the most prominent people in business,
government, and the military. . . . We see a web of secret
deals, espionage, Swiss bank transactions, and high-pow¬
ered political pressure spanning the Atlantic... . Higham
documents these transactions convincingly. . . . People
who try to track the corporate connections in WW II find
that many footsteps disappear into the banks of Switzer¬
land. Using declassified U.S. documents, Higham has
written a powerfully disturbing account of where those
footsteps lead.” — The Weekly (Seattle)

“WELL-DOCUMENTED.... Higham’s list of business¬
men and government officials who profited from the war
is a long and shocking one.”

—Baker & Taylor Book Alert

Books by Charles Higham

Theater and Film

HOLLYWOOD IN THE FORTIES
(with Joel Greenberg)

THE CELLULOID MUSE:
Hollywood Directors Speak
(with Joel Greenberg)

THE FILMS OF ORSON WELLES

HOLLYWOOD AT SUNSET

HOLLYWOOD CAMERAMEN

ZIEGFELD

CECIL B. DEMILLE:

. A Biography

THE ART OF THE AMERICAN FILM
AVA
KATE:

The Life of Katharine Hepburn

CHARLES LAUGHTON:

An Intimate Biography

MARLENE:

The Life of Marlene Dietrich

CELEBRITY CIRCUS

ERROL FLYNN:

The Untold Story

BETTE:

The Life of Bette Davis

PRINCESS MERLE
(with Roy Moseley)

Fiction

THE MIDNIGHT TREE

General

THE ADVENTURES OF CONAN DOYLE:
The Life of the Creator of Sherlock Holmes

Poetry

A DISTANT STAR
SPRING AND DEATH
THE EARTHBOUND
NOONDAY COUNTRY
THE VOYAGE TO BRINDISI

Anthologies

THEY CAME TO AUSTRALIA
(with Alan Brissenden)

AUSTRALIANS ABROAD
(with Michael Wilding)

PENGUIN AUSTRALIAN WRITING TODAY

Politics

TRADING WITH THE ENEMY:

An Expose of The Nazi-American Money Plot 1933-1949

TRADING
WITH THE
ENEMY:

An Expose of the
Nazi-American Money Plot
1933-1949

CHARLES HIGHAM

A DELL BOOK

Published by
Dell Publishing Co., Inc.

1 Dag Hammarskjold Plaza
New York, New York 10017

All rights reserved. No part of this book may be reproduced
or transmitted in any form or by any means, electronic or
mechanical, including photocopying, recording, or by any
information storage and retrieval system, without the written
permission of the Publisher, except where permitted by law.
For information address Delacorte Press, New York, New York.

Dell ©reg TM 681510, Dell Publishing Co., Inc.

ISBN: 0-440-19055-X

Reprinted by arrangement with Delacorte Press
Printed in the United States of America
First Dell printing—November 1984

Contents

Acknowledgments

Preface

A Bank for All Reasons
The Chase Nazi Account
The Secrets of Standard Oil
The Mexican Connection
Trickery in Texas
The Telephone Plot
Globes of Steel
The Film Conspiracy
The Car Connection
The Systems Tycoon

113

137

151

175

201

The Diplomat, the Major, the Princess, and the Knight 213
The Fraternity Runs for Cover 233

Appendices
Selective Bibliography
Select Documentary Sources
Selected Documents
Index

247

249

253

265

Acknowledgments

I am indebted to I. F. Stone, John Toland, George Seldes, and the
staffs of various institutions of learning and record that made the
difficult task of declassification possible. Among these are the ad¬
ministrators of the manuscripts rooms of the Library of Congress,
Georgetown University in Washington, D.C., and the Franklin D.
Roosevelt Memorial Library at Hyde Park, New York. I am grate¬
ful to John Taylor, George Wagner, Kathie Nicastro, William
Lewis, Fred Pemell, Michael Miller, and James Paulauskas of the
National Archives and Records Service in Washington, D.C., and
Suitland, Maryland; to James Hall of the FBI; to Ralph V. Korp
and Michael O’Connor of the Department of the Treasury; to
Jeanne Giamporcaro of the State Department; to the staff of Army
Intelligence, Fort Meade, Maryland; to Bradford Snell, whose
forthcoming book on General Motors will exhaustively explore its
international dealings; and to John Costello, Norman Littell, Josiah
E. DuBois, Dr. Beatrice Berle, Henry Morgenthau III, Professor
Irwin Gellman, and my indispensable research assistants Howard
Davis, Frances Rowsell, and David Anderson; to the inspired guid¬
ance and advice of Pierre Sauvage; to the late Drew Pearson, who
got wind of the story long ago but only knew part of the facts; to
Jeanne Bemkopf, my editor and friend, who helped me weave the
mass of complicated data into a coherent whole; to Professor Robert
Dallek, who read and commented brilliantly on the manuscript; and
to the late Joseph Borkin, who gave good advice and supplied the
last line of the book.

Preface

It would be comforting to believe that the financial Establishment
of the United States and the leaders of American industry were
united in a common purpose following the Day of Infamy, the
Japanese attack on Pearl Harbor on December 7, 1941. Certainly,
the American public was assured that Big Business along with all
of the officials of government ceased from the moment the war
began to have any dealings whatsoever with the enemy. That assur¬
ance sustained the morale of millions of Americans who bore arms
in World War II and their kinfolk who stayed at home and suffered
the anguish of separation.

But the heartbreaking truth is that a number of financial and
industrial figures of World War II and several members of the
government served the cause of money before the cause of patrio¬
tism. While aiding the United States’ war effort, they also aided
Nazi Germany’s.

I first came across this fact in 1978 when I was declassifying
documents in the course of writing a biography that dealt with
motion picture star Errol Flynn’s Nazi associations. In the National
Archives Diplomatic Records Room I found numerous cross-refer¬
ences to prominent figures who, I had always assumed, were entirely
committed to the American cause, yet who had been marked down
for suspected subversive activities.

I had heard over the years about a general agreement of certain
major figures of American, British, and German commerce to con¬
tinue their relations and associations after Pearl Harbor. I had also
heard that certain figures of the warring governments had arranged
to assist in this. But I had never seen any documentary evidence of
it. Now, pieces of information began to surface. I started to locate
documents and have them declassified under the Freedom of Infor¬
mation Act—a painfully slow and exhausting process that lasted
two and a half years. What I found out was very disturbing.

I had been born to a patriotic British family. My father had raised

PREFACE

the first battalions of volunteers against Germany in World War I,
and had built the Star and Garter Hospital at Richmond, Surrey,
for ex-servicemen. He had been knighted by King George V for his
services to the Crown and had been a member of Parliament and
a Cabinet member. I feel a strong sense of loyalty to Britain, as well
as to my adopted country, the United States of America. Moreover,
I am part Jewish. Auschwitz is a word stamped on my heart forever.

It thus came as a severe shock to learn that several of the greatest
American corporate leaders were in league with Nazi corporations
before and after Pearl Harbor, including I.G. Farben, the collossal
Nazi industrial trust that created Auschwitz. Those leaders inter¬
locked through an association I have dubbed The Fraternity. Each
of these business leaders was entangled with the others through
interlocking directorates or financial sources. All were represented
internationally by the National City Bank or by the Chase National
Bank and by the Nazi attorneys Gerhardt Westrick and Dr. Hein¬
rich Albert. All had connections to that crucial Nazi economist,
Emil Puhl, of Hitler’s Reichsbank and the Bank for International
Settlements.

The tycoons were linked by an ideology: the ideology of Business
as Usual. Bound by identical reactionary ideas, the members sought
a common future in fascist domination, regardless of which world
leader might further that ambition.

Several members not only sought a continuing alliance of inter¬
ests for the duration of World War II but supported the idea of a
negotiated peace with Germany that would bar any reorganization
of Europe along liberal lines. It would leave as its residue a police
state that would place The Fraternity in postwar possession of
financial, industrial, and political autonomy. When it was clear that
Germany was losing the war the businessmen became notably more
“loyal.” Then, when war was over, the survivors pushed into Ger¬
many, protected their assets, restored Nazi friends to high office,
helped provoke the Cold War, and insured the permanent future of
The Fraternity.

From the outset I realized that in researching the subject I would
have to carve through an ice cream mountain of public relations. I
searched in vain through books about the corporations and their
histories to find any reference to questionable activities in World
War II. It was clear that the authors of those volumes, granted the

PREFACE

cooperation of the businesses concerned, predictably backed off
from disclosing anything that would be revealing. To this day the
bulk of Americans do not suspect The Fraternity. The government
smothered everything, during and even (inexcusably) after the war.
What would have happened if millions of American and British
people, struggling with coupons and lines at the gas stations, had
learned that in 1942 Standard Oil of New Jersey managers shipped
the enemy’s fuel through neutral Switzerland and that the enemy
was shipping Allied fuel? Suppose the public had discovered that the
Chase Bank in Nazi-occupied Paris after Pearl Harbor was doing
millions of dollars’ worth of business with the enemy with the full
knowledge of the head office in Manhattan? Or that Ford trucks
were being built for the German occupation troops in France with
authorization from Dearborn, Michigan? Or that Colonel Sosthenes
Behn, the head of the international American telephone conglomer¬
ate ITT, flew from New York to Madrid to Berne during the war
to help improve Hitler’s communications systems and improve the
robot bombs that devastated London? Or that ITT built the Focke-
Wulfs that dropped bombs on British and American troops? Or that
crucial ball bearings were shipped to Nazi-associated customers in
Latin America with the collusion of the vice-chairman of the U.S.
War Production Board in partnership with Goring’s cousin in Phil¬
adelphia when American forces were desperately short of them? Or
that such arrangements were known about in Washington and ei¬
ther sanctioned or deliberately ignored?

For the government did sanction such dubious transactions—
both before and after Pearl Harbor. A presidential edict, issued six
days after December 7, 1941, actually set up the legislation whereby
licensing arrangements for trading with the enemy could officially
be granted. Often during the years after Pearl Harbor the govern¬
ment permitted such trading. For example, ITT was allowed to
continue its relations with the Axis and Japan until 1945, even
though that conglomerate was regarded as an official instrument of
United States Intelligence. No attempt was made to prevent Ford
from retaining its interests for the Germans in Occupied France, nor
were the Chase Bank or the Morgan Bank expressly forbidden to
keep open their branches in Occupied Paris. It is indicated that the
Reichsbank and Nazi Ministry of Economics made promises to
certain U.S. corporate leaders that their properties would not be

PREFACE

injured after the Fiihrer was victorious. Thus, the bosses of the
multinationals as we know them today had a six-spot on every side
of the dice cube. Whichever side won the war, the powers that really
ran nations would not be adversely affected.

And it is important to consider the size of American investments
in Nazi Germany at the time of Pearl Harbor. These amounted to
an estimated total of $475 million. Standard Oil of New Jersey had
$120 million invested there; General Motors had $35 million; ITT
had $30 million; and Ford had $17.5 million. Though it would have
been more patriotic to have allowed Nazi Germany to confiscate
these companies for the duration—to nationalize them or to absorb
them into Hermann Goring’s industrial empire—it was clearly
more practical to insure them protection from seizure by allowing
them to remain in special holding companies, the money accumulat¬
ing until war’s end. It is interesting that whereas there is no evidence
of any serious attempt by Roosevelt to impeach the guilty in the
United States, there is evidence that Hitler strove to punish certain
German Fraternity associates on the grounds of treason to the Nazi
state. Indeed, in the case of ITT, perhaps the most flagrant of the
corporations in its outright dealings with the enemy, Hitler and his
postmaster general, the venerable Wilhelm Ohnesorge, strove to
impound the German end of the business. But even they were
powerless in such a situation: the Gestapo leader of counterintelli¬
gence, Walter Schellenberg, was a prominent director and share¬
holder of ITT by arrangement with New York—and even Hitler
dared not cross the Gestapo.

As for Roosevelt, the Sphinx still keeps his secrets. That supreme
politician held all of the forces of collusion and betrayal in balance,
publicly praising those executives whom he knew to be questionable.
Before Pearl Harbor, he allowed such egregious executives as James
D. Mooney of General Motors and William Rhodes Davis of the
Davis Oil Company to enjoy pleasant tete-&-tetes with Hitler and
Goring, while maintaining a careful record of what they were doing.
During the war, J. Edgar Hoover, Adolf A. Berle, Henry Morgen-
thau, and Harold Ickes kept the President fully advised of all inter¬
nal and external transgressions. With great skill, he never let the
executives concerned know that he was on to them. By using the
corporate leaders for his own war purposes as dollar-a-year men,
keeping an eye on them and allowing them to indulge, under license

PREFACE

or not, in their international tradings, he at once made winning the
war a certainty and kept the public from knowing what it should
not know.

Because of the secrecy with which the matter has been blanketed,
researching it presented me with a nightmare that preceded the
greater nightmare of discovery. I embarked upon a voyage that
resembled nothing so much as a descent into poisoned waters in a
diving bell.

Why did even the loyal figures of the American government allow
these transactions to continue after Pearl Harbor? A logical deduc¬
tion would be that not to have done so would have involved public
disclosure: the procedure of legally disconnecting these alliances
under the antitrust laws would have resulted in a public scandal that
would have drastically affected public morale, caused widespread
strikes, and perhaps provoked mutinies in the armed services. More¬
over, as some corporate executives were never tired of reminding the
government, their trial and imprisonment would have made it im¬
possible for the corporate boards to help the American war effort.
Therefore, the government was powerless to intervene. After 1945,
the Cold War, which the executives had done so much to provoke,
made it even more necessary that the truth of The Fraternity agree¬
ments should not be revealed.

I began with the conveniently multinational Bank for Interna¬
tional Settlements in Basle, Switzerland. The activities of this anom¬
alous institution in wartime are contained in Treasury Secretary
Henry Morgenthau’s official diaries at the Roosevelt Memorial Li¬
brary at Hyde Park, New York. Other details are contained in
reports by the estimable Lauchlin Currie, of Roosevelt’s White
House Economics Staff, whom I interviewed at length by telephone
at his home in Bogota, Colombia, to which city he had been ban¬
ished, his citizenship stripped from him in 1956 for exposing Ameri-
can-Nazi connections. Another source lay in reports by the late
Orvis Schmidt of Treasury Foreign Funds Control. Germany rec¬
ords were a useful source: Emil Puhl, vice-president and real power
of the Reichsbank, a most crucial figure in the Fraternity’s dealings,
had sent reports to his nominal superior, Dr. Walther Funk, from
Switzerland to Berlin late in the war.

I turned to the matter of the Rockefeller-controlled Chase Na¬
tional Bank, which had conducted its business for the Nazi High

PREFACE

Command in Paris until the war’s end. Evidently realizing that
future historians might want to examine the highly secret Chase
Bank files, Morgenthau had left subtle cross-references at Hyde
Park that could lead future investigators to Treasury itself. I asked
Ralph V. Korp of Treasury for access to the sealed Chase boxes,
which had been under lock and key since 1945. Under the Freedom
of Information Act, Mr. Korp obtained permission from his superi¬
ors to unseal the boxes and to declassify the large number of docu¬
ments contained therein.

From the Chase Bank it was a natural progression to Standard
Oil of New Jersey, the chief jewel in the crown of the Rockefeller
empire. Records of Standard’s dealings with the Axis were con¬
tained in the Records Rooms of the Diplomatic Branch of the
National Archives and were specially declassified. There, too, I
found records of Sterling Products, General Aniline and Film, and
William Rhodes Davis, whose FBI files were also most revealing.
Documents on ITT and RCA were classified. After waiting out the
better part of the year, I was able to obtain them from the National
Archives. Classified SKF Industries files are held in the Suitland,
Maryland, annex of the Archives. General Motors matters are cov¬
ered in the James D. Mooney public access collection of George¬
town University, Washington, D.C. The unpublished post-Pearl
Harbor diaries of Harold Ickes were invaluable; they are to be found
in the manuscript room of the Library of Congress.

The most elusive files were those on Ford in Occupied France. I
could find no reference to them in the Treasury documentary list¬
ings. I knew that a Treasury team had investigated the company.
I wondered if any member of the team could be alive.

Something jolted my memory. I remembered that a book entitled
The Devil's Chemists had appeared after World War II, written by
Josiah DuBois, an attorney who had been part of the Treasury team
at Nuremberg. The book was a harrowing account of the trial of the
executives of I.G. Farben, the Nazi industrial trust, that showed
Farben’s links to Wall Street.

I reread the book’s pages, looking for a clue. In it DuBois men¬
tioned that he came from Camden, New Jersey. I decided to call
information in the Camden area because I had a theory that, embit¬
tered by his experience in Germany and Washington, DuBois might
have returned to live there after the war. It was only a hunch, but

PREFACE

it paid off. In fact, it turned out that DuBois had gone back to his
family law firm in Camden. I wrote to him asking if he had records
of the Ford matter. I figured that these might have been so impor¬
tant that he would have been given personal custody of them; that
Secretary Morgenthau might not even have risked leaving them at
Treasury.

DuBois replied that he believed he still had the documents, in¬
cluding the letters of Edsel Ford to his managers in Nazi-occupied
France after Pearl Harbor, authorizing improvements in automo¬
bile and truck supplies to the Germans. After several weeks, DuBois
wrote to say that he had searched his attic to no avail. The docu¬
ments were missing. However, he would keep looking.

He was admitted to a hospital where he underwent major surgery.
Although enfeebled, he returned to the attic and began searching
again. Compelled by a desire to disclose the truth, he pursued his
task whenever he could find the strength. At last, when he was about
to give up hope, he uncovered the documents.

However, he explained that the main file was so incendiary that
he would not send it by mail or even by messenger—I was at liberty
to examine it in his office. I was faced with a new dilemma. Since
I was expecting delivery of an important set of documents, 1
couldn’t risk an absence from my house for a prolonged journey to
the East. I said I would call him back.

I knew that Rutgers University was close to DuBois’s offices. 1
called the Law department and asked for a student researcher.
Within an hour I received a call from a young man who needed
work. I contacted DuBois’s secretary and arranged for the student
to copy the documents on the premises. He did so; I sent an air
courier to his home to pick them up. As I read the documents, the
last details of the puzzle fell into place.

I have tried to write this book as dispassionately as possible,
without attempting a moral commentary, and without, of course,
intending implication of present corporations and their executive
boards. It will be claimed that the people in this book, since they
are dead, cannot answer and therefore should not be criticized. To
that I would reply*. Millions died in World War II. They, too, cannot
answer.

GENERAL LICENSE UNDER SECTION 3(a)

OF THE TRADING WITH THE ENEMY ACT

By virtue of and pursuant to the authority vested in
me by sections 3 and 5 of The Trading with the
Enemy Act as amended, and by virtue of all other
authority vested in me, I, Franklin D. Roosevelt,
President of the United States of America, do pre¬
scribe the following:

A general license is hereby granted, licensing any
transaction or act proscribed by section 3(a) of The
Trading with the Enemy Act, as amended, provided,
however, that such transaction or act is authorized
by the Secretary of the Treasury by means of regula¬
tions, rulings, instructions, licenses or otherwise,
pursuant to the Executive Order No. 8389, as
amended.

FRANKLIN D. ROOSEVELT

THE WHITE HOUSE,

December 13, 1941

H. MORGENTHAU, JR.

Secretary of the Treasury

FRANCIS BIDDLE

Attorney General of the United States

TRADING
WITH THE
ENEMY:

An Expose of The
Nazi-American Money Plot
1933-1949

A Bank for All Reasons

On a bright May morning in 1944, while young Americans were
dying on the Italian beachheads, Thomas Harrington McKittrick,
American president of the Nazi-controlled Bank for International
Settlements in Basle, Switzerland, arrived at his office to preside
over a fourth annual meeting in time of war. This polished Ameri¬
can gentleman sat down with his German, Japanese, Italian, British,
and American executive staff to discuss such important matters as
the $378 million in gold that had been sent to the Bank by the Nazi
government after Pearl Harbor for use by its leaders after the war.
Gold that had been looted from the national banks of Austria, Hol¬
land, Belgium, and Czechoslovakia, or melted down from the
Reichsbank holdings of the teeth fillings, spectacle frames, cigarette
cases and lighters, and wedding rings of the murdered Jews.

The Bank for International Settlements was a joint creation in
1930 of the world’s central banks, including the Federal Reserve
Bank of New York. Its existence was inspired by Hjalmar Horace
Greeley Schacht, Nazi Minister of Economics and president of the
Reichsbank, part of whose early upbringing was in Brooklyn, and
who had powerful Wall Street connections. He was seconded by the
all-important banker Emil Puhl, who continued under the regime
of Schacht’s successor, Dr. Walther Funk.

Sensing Adolf Hitler’s lust for war and conquest, Schacht, even
before Hitler rose to power in the Reichstag, pushed for an institu¬
tion that would retain channels of communication and collusion be¬
tween the world’s financial leaders even in the event of an interna¬
tional conflict. It was written into the Bank’s charter, concurred in
by the respective governments, that the BIS should be immune from
seizure, closure, or censure, whether or not its owners were at war.
These owners included the Morgan-affiliated First National Bank
of New York (among whose directors were Harold S. Vanderbilt
and Wendell Willkie), the Bank of England, the Reichsbank, the
Bank of Italy, the Bank of France, and other central banks. Estab-

TRADING WITH THE ENEMY

lished under the Morgan banker Owen D. Young’s so-called Young
Plan, the BIS’s ostensible purpose was to provide the Allies with
reparations to be paid by Germany for World War I. The Bank soon
turned out to be the instrument of an opposite function. It was to
be a money funnel for American and British funds to flow into Hit¬
ler’s coffers and to help Hitler build up his war machine.

The BIS was completely under Hitler’s control by the outbreak
of World War II. Among the directors under Thomas H. McKit-
trick were Hermann Schmitz, head of the colossal Nazi industrial
trust LG. Farben, Baron Kurt von Schroder, head of the J. H. Stein
Bank of Cologne and a leading officer and financier of the Gestapo;
Dr. Walther Funk of the Reichsbank, and, of course, Emil Puhl.
These last two figures were Hitler’s personal appointees to the
board.

The BIS’s first president was the smooth old Rockefeller banker,
Gates W. McGarrah, formerly of the Chase National Bank and the
Federal Reserve Bank, who retired in 1933. His successor was the
forty-three-year-old Leon Fraser, a colorful former newspaper re¬
porter on the muckraking New York World, a street-comer soap¬
box orator, straw-hat company director, and performer in drag in
stage comedies. Fraser had little or no background in finance or eco¬
nomics, but he had numerous contacts in high business circles and
a passionate dedication to the world of money that acknowledged
no loyalties or frontiers. In the first two years of Hitler’s assumption
of power, Fraser was influential in financing the Nazis through the
BIS. When he took over the position of president of the First Na¬
tional Bank at its Manhattan headquarters in 1935, he continued
to exercise a subtle influence over the BIS’s activities that continued
until the 1940s.

Other directors of the Bank added to the powerful financial
group. Vincenzo Azzolini was the accomplished governor of the
Bank of Italy. Yves Breart de Boisanger was the ruthlessly ambi¬
tious governor of the Bank of France; Alexandre Galopin of the Bel¬
gian banking fraternity was to be murdered in 1944 by the Under¬
ground as Nazi collaborator.

The BIS became a bete noire of U.S. Secretary of the Treasury
Henry Morgenthau, a deliberate, thorough, slow-speaking Jewish
farmer who, despite his origins of wealth, mistrusted big money and
power. A model of integrity obsessed with work, Morgenthau con-

A BANK FOR ALL REASONS

sidered it his duty to expose corruption wherever he found it. Tall
and a trifle ungainly, with a balding high-domed head, a
high-pitched, intense voice, small, probing eyes, pince-nez, and a
nervous, hesitant smile., Morgenthau was the son of Woodrow Wil¬
son’s ambassador to Turkey in World War I. He learned early in
life that the land was his answer to the quest for a decent life in
a corrupt society. He became obsessed with farming and, at the age
of twenty-two, in 1913, borrowed money from his father to buy a
thousand acres at East Fishkill, Dutchess County, New York, in
the Hudson Valley, where he became Franklin D. Roosevelt’s
neighbor. During World War I he and Roosevelt formed an inti¬
mate friendship. Elinor Morgenthau became very close to her near
namesake, Eleanor Roosevelt. While Roosevelt soared in the politi¬
cal stratosphere, Morgenthau remained rooted in his property. In
the early 1920s he published a newspaper called The American Agri¬
culturist that pushed for government credits for farmers. When
Roosevelt became governor of New York in 1928, he appointed
Morgenthau chairman of the Agricultural Advisory Commission.
Morgenthau showed great flair and a passionate commitment to the
cause of the sharecropper.

Legend has it that on a freezing winter day in 1933, FDR and
Morgenthau met and talked on the borderline of their two farms.
Morgenthau is supposed to have said to Roosevelt, “Life is getting
slow around here.’’ And FDR replied, “Henry, how would you like
to be Secretary of the Treasury?’’

What he lacked in knowledge of economics, Morgenthau rapidly
made up in his Jeffersonian principles and role as keeper of the pub¬
lic conscience. Close to a thousand volumes of his official diaries
in the Roosevelt Memorial Library at Hyde Park give a vivid por¬
trait of his inspired conducting of his high office. He was aided by
an able staff, which he ran with benign but military precision. His
most trusted aide was his Assistant Secretary, Harry Dexter White.
Unlike Morgenthau, White came from humble origins. Jewish also,
he was the child of penniless Russian immigrant parents who were
consumed with a hatred of the czarist regime. White’s early life was
a struggle: this short, energetic, keen-faced man fought to help his
father’s hardware business succeed, finally forging a career as an
economist with the aid of a Harvard scholarship and a professorship
at Lawrence College, Wisconsin. He was opinionated and

TRADING WITH THE ENEMY

self-confident to a degree. Although he was frequently accused of
being a communist sympathizer, he was in fact simply an
old-fashioned liberal driven by his ancestral memories of Russian
imperialism.

It is unfortunate that Morgenthau did not appoint White as his
representative at BIS meetings, but White was too valuable in
Washington. Instead, Morgenthau sent the more questionable
Merle Cochran to investigate the BIS. Cochran was on loan to Trea¬
sury from the State Department; he represented the State Depart¬
ment’s sophisticated neutralism before (and during) the war. Coch¬
ran became Secretary of the American Embassy in Paris, working
directly under Roosevelt’s friend the duplicitous, Talleyrand-like
Ambassador William Bullitt. Cochran spent most of his time in
Basle conveying to both Morgenthau and Cordell Hull details of
what the BIS was up to. Very much opposed to White—indeed, vio¬
lently so—Cochran was sympathetic with the BIS and to the Nazis,
as his various memoranda made clear. Morgenthau took Cochran’s
political judgments with a degree of skepticism, but continued to
use him over White’s objections because he knew the Germans
would trust Cochran and confide much in him. Day after day, Coch¬
ran lunched with Schmitz, Schroder, Funk, Emil Puhl, and the
other Germans on the BIS board, obtaining a clear picture of the
BIS’s plans for the future.

In March 1938, when the Nazis marched into Vienna, much of
the gold of Austria was looted and packed into vaults controlled
by the Bank for International Settlements. The Nazi board members
forbade any discussion of the transaction at the BIS summit meet¬
ings in Basle. Cochran, in his memoranda to Morgenthau, failed
to score this outrageous act of theft. The gold flowed into the
Reichsbank under Funk, in the special charge of Reichsbank
vice-president and BIS director, Emil Puhl. On March 14, 1939,
Cochran wrote to Morgenthau, “I have known Puhl for several
years, and he is a veteran and efficient officer.” He also praised Wal-
ther Funk.

His timing was not good. One day later, Hitler followed his forces
into Prague. The storm troops arrested the directors of the Czech
National Bank and held them at gunpoint, demanding that they
yield up the $48 million gold reserve that represented the national
treasure of that beleaguered country. The Czech directors nervously

A BANK FOR ALL REASONS

announced that they had already shifted the gold to the BIS with
instructions that it be forwarded to the Bank of England. This was
an act of great naivete. Montagu Norman, the eccentric, Van¬
dyke-bearded governor of the Bank of England, who liked to travel
the world disguised as Professor Skinner in a black opera cloak, was
a rabid supporter of Hitler.

On orders from their German captors, the Czech directors asked
the Dutch BIS president, J. W. Beyen, to return the gold to Basle.
Beyen held an anxious discussion with BIS general manager Roger
Auboin of the Bank of France. The result was that Beyen called
London and instructed Norman to return the gold. Norman in¬
stantly obliged. The gold flowed into Berlin for use in buying essen¬
tial strategic materials toward a future war.

There the matter might have been buried had it not been for a
young, very bright, and idealistic London journalist and economist
named Paul Einzig, who had been tipped off to the transaction by
a contact at the Bank of England. He published the story in the Fi¬
nancial News . The story caused a sensation in London. Einzig held
a hasty meeting with maverick Labour Member of Parliament
George Strauss. Strauss through Einzig began investigating the mat¬
ter.

Henry Morgcnthau telephoned Sir John Simon, British Chancel¬
lor of the Exchequer, on a Sunday night in an effort to determine
what was going on. Merle Cochran had telegraphed him with a
characteristic whitewash of the BIS and an outright dismissal of
Einzig’s charges that the BIS was a Nazi outfit. Sir John said icily
on the transatlantic wire, “I’m in the country, Mr. Secretary, We
are enjoying our dinner. It is not our custom to do business by tele¬
phone.”

“Well, Sir John,” Morgenthau replied, “we’ve been doing busi¬
ness by telephone over here for almost forty years!”

Sir John Simon continued to dodge Morgenthau's questions. On
May 15, George Strauss asked Prime Minister Neville Chamberlain,
“Is it true, sir, that the national treasure of Czechoslovakia is being
given to Germany?” “It is not,” the Prime Minister replied. Cham¬
berlain was a major shareholder in Imperial Chemical Industries,
partner of I.G. Farben whose Hermann Schmitz was on the board
of the BIS. Chamberlain’s reply threw the Commons into an uproar.
Einzig refused to let go. He was convinced that Norman had trans-

TRADING WITH THE ENEMY

ferred the money illegally in collusion with Sir John Simon. Simon,
in answer to a question from Strauss, denied any knowledge of the
matter.

Next day, Einzig tackled Sir Henry Strakosch, a prominent politi¬
cal figure. Strakosch refused to disclose the details of the conversa¬
tion he had had with Simon. But Strakosch finally cracked and ad¬
mitted that Simon had discussed the transfer of the Czech gold.

Einzig was jubilant. He called Strauss with the news. Strauss put
a further question to Sir John Simon in a debate on May 26. Once
again, Simon hedged. Winston Churchill was the leader of a violent
onslaught on the unfortunate Chancellor of the Exchequer.

Morgenthau demanded to know more. Cochran’s letter from
Basle dated May 9 and received May 17 brushed over the issue once
more. Cochran wrote,

There is an entirely cordial atmosphere at Basle; most of the
central bankers have known each other for many years, and
these reunions are enjoyable as well as profitable to them. I
have had talks with all of them. The wish was expressed by
some of them that their respective statesmen might quit hurling
invectives at each other, get together on a fishing trip with Pres¬
ident Roosevelt or to the World’s Fair, overcome their various
prides and complexes, and enter into a mood that would make
comparatively simple the solution of many of the present politi¬
cal problems.

This picture of good cheer scarcely convinced Morgenthau. On
May 31, Associated Press reported from Switzerland that transac¬
tions were completed between the BIS and the Bank of England and
the Czech gold was now firmly in Berlin.

During World War II, Einzig, who had never forgotten the Czech
gold affair, ran into J. W. Beyen in London and asked him if he
would now admit what had taken place. Beyen said smoothly, “It
is all technical. The gold never left London.” Einzig was amazed.
He wrote an apology to Beyen in his book of memoirs, In the Center
of Things.

The truth was that the gold had not had to leave London in order
to be available in Berlin. The arrangement between the BIS and its
member banks was that transactions were not normally made by

A BANK FOR ALL REASONS

shipping money—dangerous and difficult when the shipments
would show up in customs manifests—but simply by adjusting the
gold deposit accounts. Thus, all Montagu Norman had to do was
to authorize Beyen to deduct $40 million from the Bank of En¬
gland’s holdings in Basle and replace the same amount from the
Czech National Bank holdings in London.

By 1939, the BIS had invested millions in Germany, while Kurt
von Schroder and Emil Puhl deposited large sums in looted gold
in the Bank. The BIS was an instrument of Hitler, but its continuing
existence was approved by Great Britain even after that country
went to war with Germany, and the British director Sir Otto Nie-
meyer, and chairman Montagu Norman, remained in office
throughout the war.

In the middle of the Czech gold controversy, Thomas Harrington
McKittrick was appointed president of the Bank, with Emil Meyer
of the Swiss National Bank as chairman. White-haired,
pink-cheeked, smooth and soft-spoken, McKittrick was a perfect
front man for The Fraternity, an associate of the Morgans and an
able member of the Wall Street establishment. Bom in St. Louis,
he went to Harvard, where he edited the Crimson, graduating as
bachelor of arts in 1911. He worked his way up to become chairman
of the British-American Chamber of Commerce, which numbered
among its members several Nazi sympathizers. He was a director
of Lee, Higginson and Co., and made substantial loans to Germany.
He was fluent in German, French, and Italian. Though he spent
all of his career inland, he wrote learned papers on the life and habits
of seabirds. His wife, Maijorie, and his four pretty daughters, one
of whom was at Vassar and a liberal enemy of the BIS, were popular
on both sides of the Atlantic.

Early in 1940, McKittrick traveled to Berlin and held a meeting
at the Reichsbank with Kurt von Schroder of the BIS and the Gesta¬
po. They discussed doing business with each other’s countries if war
between them should come.

Morgenthau grew more aggravated by McKittrick and the BIS
as the war in Europe continued, but did not insist he be withdrawn.
He was forced to rely upon Treasury Secret Service reports rather
than upon Cochran for information on the BIS’s doings. He learned
that in June 1940, Belgian BIS director Alexandre Galopin had in¬
tercepted $228 million in gold sent by the Belgian government to

TRADING WITH THE ENEMY

the Bank of France and had shifted it to Dakar in North Africa
and thence the Reichsbank and Emil Puhl.

The Bank of Belgium’s exiled representatives in New York sued
the Bank of France, represented by New York State senator
Frederic Coudert, to recover their gold. Ironically, they were repre¬
sented by John Foster Dulles, whose law firm, Sullivan and Crom¬
well, had represented I.G. Farben. The Supreme Court ruled in
favor of the Bank of Belgium, ordering the Bank of France to pay
out from its holdings in the Federal Reserve Bank.

But when Hitler occupied all of France in November 1942, State
Senator Coudert stepped in with the excuse that since Germany had
absorbed the Bank of France, that bank no longer had any power
of appeal against the verdict. He pretended that contact with France
was no longer possible, while fully aware of the fact that he himself
was still retained by the Bank of France. He claimed that only a
Bank of France representative could allow the release of funds from
the Federal Reserve Bank. As a result, the gold remained in Nazi
hands.

On May 27, 1941, Secretary of State Cordell Hull, at Morgen-
thau’s suggestion, telegraphed U.S. Ambassador John G. Winant
in London, asking for a report on the continuing relationship be¬
tween the BIS and the British government. It infuriated Morgen-
thau that Britain remained a member of a Nazi-controlled financial
institution: Montagu Norman and Sir Otto Niemeyer of the Bank
of England were still firmly on the board. Winant had lunch with
Niemeyer. He gave an approving report of the meeting on June 1.

Niemeyer had said that the BIS, “guaranteed immunity from
constraint in time of war,” was still “legal and intact.” He admitted
that Britain retained an interest in the Bank through McKittrick
twenty-one months after war had broken out. He said that he was
in touch with the Bank through the British Treasury and that Brit¬
ish Censorship examined all of the mail by his own wish. Asked
about the issue of the Czechoslovakian gold, Niemeyer admitted,
“Yes, it had a bad public press. However, that was due to the mis¬
handling of the question in Parliament.” He further admitted that
the government of Great Britain was still a client of the Bank and
had accepted a dividend from it. The dividend, it scarcely needs ad¬
ding, came largely from Nazi sources. Niemeyer said that he be¬
lieved the British should continue the association for the duration

A BANK FOR ALL REASONS

as well as lend the Bank their tacit approval, “If only for the reason
that a useful role in post-war settlements might later have an effect.”

Niemeyer went on, “It would be of no use at this time to raise
difficult legal questions with respect to the relationship of the vari¬
ous countries overrun by the Germans.. . . McKittrick should stay
in Switzerland because he is . . . guardian of the Bank against any
danger that might occur.... McKittrick might want to get in touch
with the American Minister in Switzerland and explain his problem
to him.”

On July 13, 1941, Ivar Rooth, governor of the Bank of Sweden,
wrote to his friend Merle Cochran—who had returned to Washing¬
ton—about the latest federal meeting of the Bank and the luncheon
at the Basle restaurant Les Trois Rois afterward. He said that it
was agreed at lunch that McKittrick should soon travel to the
United States to explain BIS’s position to “your American friends
... [in the] very correct and neutral way.” Rooth continued, “I hope
that our friends abroad will understand the political necessity of
committing the Germans to send a division to Finland by railway
through Sweden.”

On February 5, 1942, almost two months after Pearl Harbor, the
Reichsbank and the German and Italian governments approved the
orders that permitted Thomas H. McKittrick to remain in charge
of the BIS until the end of the war. One document of authorization
included the significant statement, “McKittrick’s opinions are
safely known to us.” McKittrick gratefully arranged a loan of sev¬
eral million Swiss gold francs to the Nazi government of Poland
and the collaborative government of Hungary. Most of the board’s
members traveled freely across frontiers throughout the war for
meetings in Paris, Berlin, Rome, or (though this was denied) Basle.
Hjalmar Schacht spent much of the war in Geneva and Basle pulling
strings behind the scenes. However, Hitler correctly suspected him
of intriguing for the overthrow of the present regime in favor of The
Fraternity and imprisoned him late in the war. From Pearl Harbor
on, the BIS remained listed in Rand McNally’s director as Corre¬
spondent Bank for the Federal Reserve Bank in Washington.

In London, Labour Member of Parliament George Strauss kept
hammering away at the BIS. In May 1942 he challenged Sir John
Simon’s successor, Chancellor of the Exchequer Sir Kingsley Wood,
on the matter. Wood replied, “This country has various rights and

TRADING WITH THE ENEMY

interests in the BIS under our international trust agreements be¬
tween the various governments. It would not be in our best interest
to sever connections with the Bank.”

George Strauss and other Labour members of Parliament insisted
upon knowing why the Bank’s dividend was still being divided
equally in wartime among the British, German, Japanese, and
American banks. It was not until 1944 that they discovered Ger¬
many was receiving most of the dividends.

On September 7, 1942, Thomas H. McKittrick issued the Bank’s
first annual report after Pearl Harbor. He went through the bizarre
procedure of addressing an empty room with the report to be able
to say to Washington that none of the Axis directors was present.
In fact, all of the Axis directors received the report soon afterward
and the mixed executive staff of warring nations discussed it
through the rest of the day. The report was purely Nazi in content.
It assumed an immediate peace in Germany’s favor and a distribu¬
tion of American gold to stabilize the currencies of the United States
and Europe. This was a line peddled by every German leader start¬
ing with Schacht. When Strauss told the House of Commons on
October 12 that the report had delighted Hitler and Goring, Sir
Kingsley asserted that he had not seen it. Strauss went on, “It is
clear some form of collaboration between the Nazis and the Allies
exists and that appeasement still lives in time of war.”

In the summer of 1942, Pierre Pucheu, French Cabinet member
and director of the privately owned Worms Bank in Nazi-occupied
Paris, had a meeting at the BIS with Yves Breart de Boisanger. Pu¬
cheu told Boisanger that plans were afoot for General Dwight D.
Eisenhower to invade North Africa. He had obtained this informa¬
tion through a friend of Robert Murphy, U.S. State Department
representative in Vichy. Boisanger contracted Kurt von Schroder.
Immediately, Schroder and other German bankers, along with their
French correspondents, transferred 9 billion gold francs via the BIS
to Algiers. Anticipating German defeat, they were seeking a killing
in dollar exchange. The collaborationists boosted their holdings
from $350 to $525 million almost overnight. The deal was made
with the collusion of Thomas H. McKittrick, Hermann Schmitz,
Emil Puhl, and the Japanese directors of the BIS. Another collabo¬
rator in the scheme was one of the Vatican’s espionage group who
leaked the secret to others in the Hitler High Command—according

A BANK FOR ALL REASONS

to a statement made under oath by Otto Abetz to American officials
on June 21, 1946.

In the spring of 1943, McKittrick, ignoring the normal restric¬
tions of war, undertook a remarkable journey. Despite the fact he
was neither Italian nor diplomat and that Italy was at war with the
United States, he was issued an Italian diplomatic visa to travel by
train and auto to Rome. At the border he was met by Himmler’s
special police, who gave him safe conduct. McKittrick proceeded
to Lisbon, whence he traveled with immunity from U-boats by
Swedish ship to the United States. In Manhattan in April he had
meetings with Leon Fraser, his old friend and BIS predecessor, and
with the heads of the Federal Reserve Bank. Then McKittrick trav¬
eled to Berlin on a U.S. passport to provide Emil Puhl of the Reichs-
bank with secret intelligence on financial problems and high-level
attitudes in the United States.

On March 26, 1943, liberal congressman Jerry Voorhis of Califor¬
nia entered a resolution in the House of Representatives calling for
an investigation of the BIS, including “the reasons why an Ameri¬
can retains the position as president of this Bank being used to fur¬
ther the designs and purposes of Axis powers.” Randolph Paul,
Treasury counsel, sent up the resolution to Henry Morgenthau on
April 1, 1943, saying, “I think you will be interested in reading the
attached copy of [it].” Morgenthau was interested, but he made one
of his few mistakes and did nothing. The matter was not even con¬
sidered by Congress.

Washington State Congressman John M. Coffee objected and in¬
troduced a similar resolution in January 1944. He shouted, angrily,
“The Nazi government has 85 million Swiss gold francs on deposit
in the BIS. The majority of the board is made up of Nazi officials.
Yet American money is being deposited in the Bank.”

Coffee pointed out that the American and British shareholders
were receiving dividends from Nazi Germany and Japan and that
the Germans and Japanese were receiving dividends from America.
The resolution was tabled.

There the matter might have lain had it not been for an energetic
Norwegian economist of part-German origin named Wilhelm Keil-
hau. He was infuriated by Washington’s continuing refusal to break
with the Bank and its acceptance of a flagrant financial alliance with
its country’s enemies.

TRADING WITH THE ENEMY

Keilhau introduced a resolution at the International Monetary
Conference at Bretton Woods, New Hampshire, on July 10, 1944.
He called for the BIS to be dissolved “at the earliest possible mo¬
ment." However, pressure was brought to bear on him to withdraw
a second resolution, and he was forced to yield. The second resolu¬
tion called for an investigation into the books and records of the
Bank during the war. Had such an investigation taken place, the
Nazi-American connection would undoubtedly have been exposed.

Bankers Winthrop Aldrich and Edward E. (Ned) Brown of the
American delegation and the Chase and First National banks tried
feebly to veto Keilhau’s resolution. They were supported by the
Dutch delegation and by J. W. Beyen of Holland, the former presi¬
dent of BIS and negotiator of the Czech gold transference, despite
the fact that Holland’s looted gold had gone to the BIS. Leon Fraser
of the First National Bank of New York stood with them. So, alas,
did the British delegation, strongly supported by Anthony Eden and
the Foreign Office. After initial support, the distinguished econo¬
mist Lord Keynes was swayed into confirming the British official
opposition calling for a postponement of the Bank’s dissolution until
postwar—when the establishment of an international monetary
fund would be completed. Keynes’s wife, the former Lydia
Lopokova, the great star of the Diaghilev Ballet who had made her
debut opposite Nijinsky, was a member of a wealthy czarist family
who influenced her husband toward delaying the BIS’s dissolution
and a tabling of all discussion of looted gold—according to Harry
Dexter White.

Dean Acheson, representing the State Department in the Ameri¬
can delegation, was firmly in Winthrop Aldrich’s camp as a former
Standard Oil lawyer, smoothly using delaying tactics as the master
of compromise he was. The minutes of the meetings between Mor-
genthau, Edward E. Brown, Acheson, and other members of the
delegation on July 18-19, 1944, at the Mount Washington Hotel
at Bretton Woods show Acheson arguing for retention of the BIS
until after the war. He used the spurious argument that if McKit-
trick resigned and the Bank was declared illegal by the United States
government, all of the gold holdings in it owned by American share¬
holders would go direct to Berlin, via a Nazi president. Acheson
must surely have known that the gold was already deposited for the
Axis via the BIS partner, the Swiss National Bank, which shared

A BANK FOR ALL REASONS

the same chairman. Acheson also argued that the Bank would help
restore Germany postwar. That at least was true.

Senator Charles W. Tobey of New Hampshire emerges with great
credit from the minutes of the meetings at the Mount Washington.
At the July 18 meeting he said, savagely, to the company in general,
“What you’re doing by your silence and inaction is aiding and abet¬
ting the enemy.” Morgenthau agreed. Acheson, rattled, said that
the BIS must go on as “a matter of foreign policy.” At least there
was a degree of honesty in that. Morgenthau felt that the BIS
“should be disbanded because to disband it would be good propa¬
ganda for the United States.”

There were jocular moments during the discussion on July 19.
Dr. Mabel Newcomer of Vassar said that she “would not dissolve
the Bank.” Morgenthau asked her cheerfully whether McKittrick’s
daughter was one of her students. She replied in the affirmative.
Morgenthau said, “She has informed my daughter that she is
against the Bank.” Dr. Newcomer replied, “She didn’t inform me,
except that she wanted her father to come home—so she might
favor the dissolution!”

Everyone laughed. Morgenthau said, “She is very cute. She has
read this article in PM about it, and she said [referring to an attack
on the BIS in that liberal publication] ‘I think PM is right and father
is wrong.’ ” Morgenthau threw back his head and laughed again.
“That is what Vassar does to those girls!”

Under pressures from Senator Tobey and from Harry Dexter
White, Morgenthau stated that Leon Fraser, McKittrick, and
Beyen all had sympathies “that run there.” In other words, in the
direction of Germany. He said,

I think in the eyes of the Germans, they would consider this
as the kind of thing which can go on, and it holds out to them
a hope, particularly to people like Dr. Schacht and Dr. Funk,
that the same [associations] will continue [between American
and Germany] after the war. It strengthens the position of peo¬
ple like Mr. Leon Fraser and some very important people like
Mr. Winthrop Aldrich, who have openly opposed this dissolu¬
tion.

Dean Acheson, fighting hard with Edward E. Brown at his side,

TRADING WITH THE ENEMY

said he “would have to take the matter up with Cordell Hull.*' He
was sure Hull would want the BIS retained since Hull had approved
its existence up till now. Morgenthau promised to call Hull, who
had become acutely embarrassed by press criticism. After four years
of tacitly approving the BIS, Hull told Morgenthau he called for
its dissolution. Morgenthau telephoned him and said, “What about
McKittrick?” Hull replied icily, “Let him read about it in the pa¬
pers!” Later, he repeated angrily to Acheson, “Let him read about
it in the papers!”

Acheson went to see the British delegation on July 20. Closely
connected to high-level politicians in England, he was well regarded
in Whitehall. Lord Keynes felt that the BIS might be too quickly
abolished if Acheson were beaten by the Morgenthau faction. Al¬
though Keynes was advanced in years and had a heart condition,
he and his wife abruptly left a British summit meeting and, finding
the elevator jammed with conferencers, ran up three flights of stairs
and knocked on the Morgenthaus’ door. Elinor Morgenthau was
astonished to see the normally imperturbable British economist
trembling, red-faced, and sweating with rage.

Keynes repeated, as calmly as he could, that what he was upset
about was that he felt that the BIS should be kept going until a new
world bank and an international monetary fund were set up. Lady
Keynes also urged Morgenthau to let the Bank go on. Finally,
Keynes, seeing that Morgenthau was under pressure to dissolve the
BIS, shifted his ground and took the position that Britain was in
the forefront of those who wanted the BIS to go—but only in good
time. Morgenthau insisted the BIS must go “as soon as possible.”
At midnight an exhausted Keynes said he would go along with the
decision.

Keynes returned to his rooms and contacted his fellow delegates
from the Foreign Office. The result of this late-night meeting was
that he largely compromised his original agreement and at 2 a.m.
sent a letter by hand to the Morgenthaus’ suite again calling for the
BIS to go on for the duration.

Next day, over the objections of Edward E. Brown and the great
irritation of Dean Acheson, Morgenthau’s delegation approved the
disposal of the BIS.

Immediately after the liquidation of the BIS was voted, McKit¬
trick did everything possible to combat it. He sent letters to Morgen-

A BANK FOR ALL REASONS

thau and the Chancellor of the Exchequer, Sir John Anderson, in
London. He stated that when the war ended, huge sums would have
to be paid to Germany by the Allies and the BIS would have to si¬
phon these through. There was no mention of the millions owed
by Germany to the Allies and the conquered nations. Harry Dexter
White sent a memorandum to Morgenthau dated March 22, 1945,
saying, “McKittrick’s letters are part of an obvious effort to stake
out a claim for the BIS in the postwar world. As such, they are,
in effect, a challenge to Bretton Woods. . . . The other signatories
to the Bretton Woods Act should be advised of the BIS action,
should be reminded of Bretton Woods’ resolution Number Five,
and should be advised that we are not answering the letters.”

The same day, Treasury’s indispensable Orvis A. Schiriidt held
a meeting with McKittrick in Basle. His comment on McKittrick’s
remarks was sharp: “I was surprised that a voluntary recital in¬
tended as a defense of the BIS could be such an indictment of that
institution.” When Schmidt asked McKittrick why the Germans
had been willing to allow the BIS to be run as it had and had contin¬
ued to make payments to the BIS, McKittrick replied, “In order
to understand, one must first understand the strength of the confi¬
dence and trust that the central bankers had had in each other and
the strength of their determination to play the game squarely. Sec¬
ondly, one must realize that in the complicated German financial
setup, certain men who have their central bankers’ point of view
are in very strategic positions and can influence the conduct of the
German Government with respect to these matters.”

McKittrick went on to say that there was a little group of finan¬
ciers who had felt from the beginning that Germany would lose the
war; that after defeat they might emerge to shape Germany’s desti¬
ny. That they would 4, tnaintain their contacts and trust with other
important banking elements so that they would be in a stronger po¬
sition in the postwar period to negotiate loans for the reconstruction
of Germany.”

McKittrick declined to name all save one of the little group, tak¬
ing particular care to hide the name of Kurt von Schroder. Since
he had to name someone, he selected Emil Puhl. Nevertheless, he
pretended that Puhl “does not share the Nazi point of view.” Orvis
Schmidt was not deceived by this. He knew perfectly well that it
was Puhl who had authorized the looting of Allied gold and its

TRADING WITH THE ENEMY

transferal to Switzerland and who had been talking to McKittrick
the day before in Basle about that very subject.

Schmidt closed in. He asked McKittrick whether he knew what
had happened to the Belgian gold deposited in the Bank of France.
McKittrick replied: “I know where it is. I will tell you. But it is
extremely important that word does not leak out. It is in the vaults
of the Reichsbank.” Evidently he realized he had said too much:
that he had let slip his own role in the transaction. He added hastily:
“I’m sure it will be in Berlin when you get there. Puhl is holding
it for return to the Belgians after the war.’* This barefaced lie
scarcely impressed Schmidt. The gold was already in Switzerland.

McKittrick did not end there. He admitted that the Germans had
sent gold to the BIS and said, “When the war is over you’ll find
it all carefully segregated and documented. Anything that’s been
looted can be identified. When gold was offered to us, I thought it
would be better to take it and hold it rather than to refuse it and
let the Germans keep it for other uses.”

McKittrick continued, “I’m so sorry I can’t ask you to take a
look at the books and records of the Bank. When you do see them
at the end of the war, you will appreciate and approve of the role
that I and the BIS have played during the war.” They were, of
course, never released.

Orvis Schmidt went on to see the executives of the Swiss National
Bank, which maintained its partnership in the BIS and shared the
same chairman, Ernst Weber. Schmidt raised the question of the
looted gold: the $378 million in gold of Belgium, Czechoslovakia,
Holland, and other occupied countries, including the treasure of the
Jews. He knew that by a technicality the BIS no longer siphoned
the gold through directly but sent it to its associated earmarked ac¬
count at the Swiss National Bank.

The Swiss National Bank officials told Schmidt that in order to
be sure they were not obtaining looted gold, they had requested a
member of the Reichsbank, whom they “regarded to be trustwor¬
thy,” to certify that each parcel of gold that they purchased had
not been looted. Schmidt asked who that person might be. He was
not surprised when the directors of the Swiss National Bank in¬
formed him that that personage was none other than Emil Puhl,
who had just left ahead of his arrival. At the Nuremberg Trials in
May 1946, Walther Funk, still listed as a BIS director, testified that

A BANK FOR ALL REASONS

Puhl had American connections and had been offered a major post
at Chase in New York shortly before Pearl Harbor. Funk admitted
that Puhl was in charge of gold shipments. He admitted receiving
the gold reserve of the Czech National Bank and the Belgian gold,
and he added, “It was very difficult to pay [in foreign exchange]
in gold. . . . Only in Switzerland could we still do business through
changing gold into foreign currency.” Funk said that Puhl had in¬
formed him in 1942 that the Gestapo had deposited gold coins, and
other gold, from the concentration camps, in the Reichsbank. Puhl
had been in charge of this. Jewels, monocles, spectacle frames,
watches, cigarette cases, and gold dentures had flowed into the
Reichsbank, supplied by Puhl from Heinrich Himmler’s resources.
They were melted down into gold bars; he did not add how many
bars were marked for shipment to Switzerland. Each gold bar
weighed 20 kilograms. An affidavit was read to Funk, signed by
Puhl, confirming the facts. Puhl stated that Funk had made ar¬
rangements with Himmler to receive the gold.

Funk unsuccessfully sought to disclaim responsibility for the
scheme. He dismissed Puhl’s charges that the gold was plowed into
a revolving fund. Faced with a film showing as many as seven¬
ty-seven shipments of gold teeth, wedding rings, and other loot at
one time, he stuck to his story. At one stage he said that the loot
was brought to the Reichsbank by mistake! His lies became so ab¬
surd that they were laughable. When prosecutor Thomas E. Dodd
said to him, “There was blood on this gold, was there not, and you
knew this since 1942?” Funk replied weakly, “I did not under¬
stand.”

On May 15, 1946, Puhl took the witness stand. Puhl claimed that
he had objected to the shipments as “inconvenient” and “uncom¬
fortable”—a curious description. He admitted that his “objections”
were “subordinated to the broader consideration of assisting the SS,
all the more—and this must be emphasized—because these things
were for the account of the Reich.”

The prosecuting counsel read items from a report that included
the statement, “One of the first hints of the sources of [the gold]
occurred when it was noticed that a packet of bills was stamped
with a rubber stamp, ‘Lublin.’ This occurred some time early in
1943. Another hint came when some items bore the stamp, ‘Ausch¬
witz.’ We all knew that these places were the sites of concentration

TRADING WITH THE ENEMY

camps. It was in the tenth delivery, in November 1942, that dental
gold appeared. The quantity of the dental gold became unusually
great.”

In October 1945 the Senate Committee on Military Affairs pro¬
duced further evidence of Puhl’s activities. His letters to Funk from
Switzerland in March 1945 were read out. They showed his desper¬
ate and successful efforts to overcome the dfects of the mission, that
month headed by Lauchlin Currie and Orvis Schmidt. Puhl had
constantly hammered away at McKittrick and the Swiss National
Bank in order to secure the flow of the looted gold of Europe. Mc¬
Kittrick, brutally exposed by the Bretton Woods Conference’s Nor¬
wegian delegation, had—the letters showed—panicked, seeking to
avoid direct receipt of the gold. Instead, the Swiss National Bank,
as BIS shareholder, would take it into its vaults. But in order to
camouflage the receipt of it, since the Swiss National Bank had
promised the Americans they would not receive it, the Swiss Na¬
tional Bank had disguised it as payments to the American Red
Cross and the German legations in Switzerland. There was a starkly
ironical humor in this. General Robert C. Davis, head of the New
York chapter of the American Red Cross, was also chairman of the
part-Nazi network Transradio. As late as 1943, the German Lega¬
tion in Berne was buying Standard Oil for its heating and automo¬
biles, which were supplied and repaired by U.S. subsidiaries. Tons
of gold, thus laundered, poured into the Swiss National Bank in
those last months of the war.

In 1948, under great pressure from Treasury, the Bank for Inter¬
national Settlements was compelled to hand over a mere $4 million
in looted gold to the Allies.

Despite the fact that the evidence of the Puhl-McKittrick con¬
spiracy was overwhelming, McKittrick was given an important post
by the Rockefellers and Winthrop Aldrich: vice-president of the
Chase National Bank, a position he occupied successfully for several
years after the war. In 1950 he invited Emil Puhl to the United
States as his honored guest. And the Bank for International Settle¬
ments, despite the Bretton Woods Resolution, was not dissolved.

The Chase Nazi Account

It was only appropriate that Thomas Harrington McKittrick should
have been so amply rewarded by Winthrop Aldrich, John D. Rocke¬
feller’s brother-in-law, because Joseph J. Larkin, one of Aldrich’s
most trusted vice-presidents, in charge of European affairs, figured
prominently in The Fraternity.

The Rockefellers* Chase National Bank (later the Chase Manhat¬
tan) was the richest and most powerful financial institution in the
United States at the time of Pearl Harbor. The Rockefellers owned
Standard Oil of New Jersey, the German accounts of which were
siphoned through their own bank, the Chase, as well as through the
independent National City Bank of New York, which also handled
Standard, Sterling Products, General Aniline and Film, SKF, and
ITT, whose chief, Sosthenes Behn, was a director of the N.C.B. Two
executives of Standard Oil’s German subsidiary were Karl Linde-
mann and Emil Helfferich, prominent figures in Himmler’s Circle
of Friends of the Gestapo—its chief financiers—and close friends
and colleagues of the BIS’s Baron von Schroder.

Larkin kept the Chase Bank open not only in the neutral coun¬
tries of Europe and South America but in Nazi-occupied Paris
throughout World War II. After Pearl Harbor, Chase’s Paris
branch provided financial arrangements for the German Embassy
and German businesses in Paris, under the “guidance” of Emil
Puhl’s right-hand man at the Reichsbank, Hans-Joachim Caesar,
and with the full acceptance of New York.

In common with most members of The Fraternity, Winthrop Al¬
drich was politically schizophrenic, capable of playing both ends
against the middle in the interests of Big Money. On the one hand
he was a most generous supporter of Great Britain in her belea¬
guered state, raising millions for British war relief in a campaign
that in 1942 earned him audiences at 10 Downing Street and Buck¬
ingham Palace. Yet with great duplicity he turned a blind eye to

TRADING WITH THE ENEMY

Larkin’s continuances of the Chase interests and banking headquar¬
ters in Occupied Paris.

Joseph J. Larkin resembled Aldrich in his immaculate tailoring,
perfect manners, austere deportment, and in his dedication to The
Fraternity. A distinguished member of a Roman Catholic family,
he had received the Order of the Grand Cross of the Knights of
Malta from Pope Pius XI in 1928. He was an ardent supporter of
General Franco and, by natural extension, Hitler. Morgenthau first
suspected him as a fascist sympathizer in October 1936, when Fer¬
nando de los Rios, the ambassador of Loyalist Spain, dedicated to
Franco’s defeat, went to see Larkin to open an account of $4 million.
The account was to be used to raise local assistance for the Spanish
government, including the Lincoln Brigade. Larkin said firmly that
the $4 million account would not be allowed.

Larkin went a step further in the service of fascism. When the
Loyalist government deposited a similar amount in the Chase Bank
in Paris, Larkin was furious with the subordinate who accepted the
account. He immediately contacted the Loyalist emissary in Paris
and had him withdraw the deposit. Simultaneously, with the en¬
couragement of Schacht, Larkin took on the Franco account and
the Reichsbank account, though the Reichsbank was under the per¬
sonal control of Hitler. In 1942, introducing a book entitled Patents
for Hitler by Gunther Reimann, the lawyer Creekmore Fath wrote:

Since the middle thirties, whenever a German business group
wanted to make an agreement with any business concern be¬
yond the borders of Germany, it was required first to submit
a full text of the proposed agreement to the Reichsbank. The
Reichsbank rejected or rewrote until the agreement met its ap¬
proval. The Reichsbank approved no agreement which did not
fit into the plans of the Nazi State and carry that state another
step toward its goal of world domination. In other words, any
American firm which reached an agreement or dealt with a
German firm . . . was dealing . . . with Hitler himself.*

As war approached, the links between the Rockefellers and the
Nazi government became more and more firm. In 1936 the J. Henry

•Through, of course, the indispensable Emil Puhl.

THE CHASE NAZI ACCOUNT

Schroder Bank of New York had entered into a partnership with
the Rockefellers. Schroder, Rockefeller and Company, Investment
Bankers, was formed as part of an overall company that Time mag¬
azine disclosed as being “the economic booster of the Rome-Berlin
Axis.*’ The partners in Schroder, Rockefeller and Company in¬
cluded Avery Rockefeller, nephew of John D., Baron Bruno von
Schroder in London, and Kurt von Schroder of the BIS and the
Gestapo in Cologne. Avery Rockefeller owned 42 percent of
Schroder, Rockefeller, and Baron Bruno and his Nazi cousin 47 per¬
cent. Their lawyers were John Foster Dulles and Allen Dulles of
Sullivan and Cromwell. Allen Dulles (later of the Office of Strategic
Services) was on the board of Schroder. Further connections linked
the Paris branch of Chase to Schroder as well as the pro-Nazi
Worms Bank and Standard Oil of New Jersey in France. Standard
Oil’s Paris representatives were directors of the Banque de Paris et
des Pays-Bas, which had intricate connections to the Nazis and to
Chase.

Six months before the war broke out in Europe, Joseph J. Larkin
brought off his most audacious scheme in the Nazi interest, acting
in collusion with the Schroder Bank. Aldrich and the Schroders se¬
cured no less than $25 million American for the use of Germany’s
expanding war economy and accompanied it with a detailed record
(supplied direct to the Chase Bank in Berlin for forwarding to the
Nazi government) of the assets and background of ten thousand
Nazi sympathizers in the United States. The negotiations were engi¬
neered with the help of Dr. Walther Funk and Emil Puhl.

In essence, the Nazi government through the Chase National
Bank offered Nazis in America the opportunity to buy marks with
dollars at a discount. The arrangement was open only to those who
wished to return to Germany and would use the marks in the inter¬
est of the Nazis. Before any transaction could be made, such persons
had to convince the Nazi embassy in Washington that they were
bona fide supporters of German policy. They were told in pamphlets
sent out by the Chase National Bank in Manhattan that Germany
could offer glorious opportunities to them and that marks would
provide a hedge against inflation and would have much increased
value after victory in the expected war.

As a result, there was a rush on marks. On February 15, 1939,
there was a summit meeting at the Chase in New York of represen-

TRADING WITH THE ENEMY

tatives of both Chase and Schroder banks on what was known as
the Riickwanderer (Reimmigrant) scheme. Alfred W. Barth was the
personal representative of Winthrop Aldrich and Joseph J. Larkin,
while E. H. Meili of J. Henry Schroder represented that side of the
association. At the meeting the members discussed a proposal that
the Reichsbank should send a special representative to the Nazi con¬
sulate in New York, which served as the headquarters of the Ge¬
stapo and had its accounts at the Chase. The American group de¬
cided that they should not take such a risk because their importing
such a person might reveal to the American public that they were
supporting Nazis. The minutes show that it was decided to “let well
enough alone” and to conduct future business on behalf of Berlin
through

the employment of numerous agents and sub-agents who oper¬
ate through the country. These agents and sub-agents in coop¬
eration with their respective principals, ourselves, can go a long
way towards educating Germans in exile and those sympa¬
thetic to the Nazi cause through extensive newspaper advertis¬
ing campaigns, radio broadcasts, as well as through literature,
etc. . . .

It is unanimously felt that it would be to the greatest advan¬
tage of everyone concerned if... Berlin would instruct the vari¬
ous consulates in the United States that all inquiries about
. . . transactions should be referred to ourselves, whose name
should be supplied not only to the various consular offices in
the U.S. but also to those who inquire at the consulates in re¬
spect to the procedure.

The bankers agreed that special attention should be focused on
shopkeepers, factory workers, and others with little money but great
potential for Germany. They should be able-bodied young men and
women of pure Aryan stock. Above all, the present meeting must
never come to the attention of the American government. The min¬
utes of the meeting state:

The ensuing publicity and the agitation that has been furthered
in certain quarters of this country [against similar schemes]
might possibly compel our Department of State to enforce a

THE CHASE NAZI ACCOUNT

clearing system between Germany and America, under which
monies due to American citizens such as inheritances, etc.,
would have to be cleared. The results are too obvious: firstly,
no benefits are likely to accrue to Germany; secondly, the final
outcome might prove disadvantageous from Germany’s stand¬
point.

Thus, the Chase directors and the barons von Schroder were
afraid that if Morgenthau discovered the true facts, the U.S. govern¬
ment might take measures detrimental to the German government.
It was an act of total collaboration with the Nazis.

In May 1940 a prominent diamond merchant in New York City,
Leonard Smit, began smuggling commercial and industrial dia¬
monds to Nazi Germany through Panama. Smit’s company was
theoretically Dutch, which placed it under the provenance of the
Nazis, but its stock was in fact owned by the International Trading
Company, which was located in Guernsey in the Channel Islands.
President Roosevelt had issued a freezing order precluding the ship¬
ment of monies to Europe, especially if these might seem to be to
the advantage of the Axis. A few days after the Smit account was
frozen, Chase officials unblocked the funds at Smit’s request. The
funds flowed out to Panama, allowing diamonds to be sent through
the Canal Zone to Berlin.

On June 17, 1940, when France was collapsing, Morgenthau via
Roosevelt again blocked the French account to prevent money
going to the enemy. Within hours of the blocking, somebody at
Chase authorized the South American branches of the Banque
Frangaise et Italienne pour l’Amerique du Sud to transfer more than
$1 million from New York to special accounts in the Argentine and
Uruguay. The Banque was 50 percent owned by the Banque de Paris
et des Pays-Bas (a Chase and Standard affiliate), and 50 percent
owned by the Mussolini-controlled Banca Commerciale Italiana. In
South America, these banks were working partly for the Axis.
Larkin continued to permit free withdrawls from the special ac¬
counts even though he knew perfectly well that such accounts were
cloaks for Banque Fran^aise et Italienne funds.

On June 23, 1941, J. Edgar Hoover wrote to Morgenthau: “Dur¬
ing the monitoring of foreign funds at the Chase Bank, FBI discov¬
ered various payments to oil companies in the United States. There

TRADING WITH THE ENEMY

are indications that the Standard Oil Company of New Jersey has
been receiving money from German oil sales by order of the Reichs¬
bank.”

Throughout 1941, The German-American Commerce Association
Bulletin ; a pro-Nazi publication, repeatedly disclosed connections
between the Chase Bank and Emil Puhl at the Reichsbank; it re¬
vealed that the Reichsbank maintained its account at the Chase. It
also maintained an account at the National City Bank when the
Reichsbank was personally under the directorship of Hitler. Any
transactions between Winthrop Aldrich and Dr. Walther Funk had
to be approved by Hitler in person.

Meanwhile, the Germans were permitted to retain accounts at
Chase banks throughout neutral Europe. Reports on these accounts
were siphoned through Madrid and Lisbon by speciaf couriers. The
U.S. ambassador to Spain held up many of the transshipments of
accounts, reporting to the Department of State on trading with Ger¬
many.

With the advent of Pearl Harbor, most American firms in Paris
closed down for the not surprising reason that their nation was now
at war with Nazi Germany. Unfortunately, Joseph J. Larkin and
Emil Puhls right-hand man, Hans-Joachim Caesar, both authorized
the retention of the Chase Bank in the Nazi-occupied city for the
duration.

Otto Abetz, the smooth ambassador to Paris and comptroller of
German interests in that city, specifically requested that the Chase
manager in Paris, Carlos Niedermann, not close his doors to Ger¬
man business. Such a request was pointless since Emil Puhl and the
Chase had already entered into an arrangement that the bank would
not close.

The Chase Bank in Paris was the focus of substantial financing
of the Nazi embassy’s activities throughout World War II with the
full knowledge of New York. In order to assure the Germans of
its loyalty to the Nazi cause, Carlos Niedermann in Paris and Albert
Bertrand and his colleagues in the Vichy branch of Chase at
Chateauneuf-sur-Cher were strenuous in enforcing restrictions
against Jewish property, even going so far as to refuse to release
funds belonging to Jews because they anticipated a Nazi decree with
retroactive provisions prohibiting such release. When this matter
was drawn to the attention of the New York office by an angry

THE CHASE NAZI ACCOUNT

Harry Dexter White in May 1942, Larkin refused to act, since to
do so “might react against our interests as we are dealing, not with
a theory, but with a situation.”

The German administrator Hans-Joachim Caesar reinstated the
Chase officials who were suspended as a result of complaints in the
Nazi hierarchy. On June 5, 1942, Albert Bertrand wrote Larkin that
Niedermann was collaborating still further with the Nazis; on June
16, Bertrand revealed that Niedermann was making arrangements
to centralize in the Paris office all deposits, securities, and general
records of the branches in France. In September 1942 more deposits
were placed. By May 1943, they had virtually doubled. Ger¬
man-controlled funds of some 15 million francs flowed in so that
Chase could meet its operating expenses. Chase acted as an interme¬
diary for banks in Brazil and Chile in transmitting to Berlin instruc¬
tions, transfers, orders, statements, and account details at a time
when Brazil was at war with Germany. Brazilian censorship prohib¬
ited such communications, and the branches were on Allied black¬
lists.

Simultaneously, Bertrand transferred securities and large sums
of money from Vichy to Germany and German-occupied countries
abroad via Emil Puhl with Larkin’s approval throughout 1942.

The Chase also handled transactions for the Nazi Banco Aleman
Transatlantico, which was, according to a Uruguayan Embassy re¬
port dated August 18, 1943, “No mere financial institution. It was
in actuality treasurer or comptroller of the Nazi Party in South
America. It received local party contributions, supervised and occa¬
sionally directed party expenditures, received party funds from Ger¬
many under various guises and juggled the deposits ... all under
the guidance of the German Legations.” It was in fact a branch of
the Deutsche Uberseeische Bank of Berlin.

Most Nazi businesses in South America handled their affairs
through the Banco Aleman. Thus, the German legations through¬
out Latin America possessed channels for distribution and receipt
of Nazi funds. The Paris Chase received large amounts of money
from Nazi sources through the medium of the Bank.

Most important of all, the Chase,, with the full knowledge of
Larkin, handled the accounts of Otto Abetz, German ambassador
to Paris, and the embassy itself.

It is interesting to consider what, among other things, Abetz and

TRADING WITH THE ENEMY

the German Embassy dealt with during the war. They poured mil¬
lions of francs into various French companies that were collaborat¬
ing with the Nazis. On August 13, 1942, 5.5 million francs were
passed through in one day to help finance the military government
and the Gestapo High Command. This money helped to pay for
radio propaganda and a campaign of terror against the French peo¬
ple, including beatings, torture, and brutal murder. Abetz paid
250,000 francs a month to fascist editors and publishers in order
to run their vicious anti-Semitic newspapers. He financed the terror¬
ist army known as the Mouvement Synarchique Revolutionnaire,
which flushed out anti-Nazi cells in Paris and saw to it they were
liquidated. In addition, Abetz used embassy funds to trade in Jewish
art treasures, including tapestries, paintings, and ornaments, for the
benefit of Goring, who wanted to get his hands on every French
artifact possible.

The Chase board in New York could not claim that it was unfa¬
miliar with these activities on the ground that communication with
Occupied France was impossible. The purpose of retaining diplo¬
matic relations with Vichy was that the U.S. government could de¬
termine what was going on in Occupied France. A constant flow
of letters, telegrams, and phone calls between Paris and the Vichy
branch of Chase in Chateauneuf-sur-Cher kept Albert Bertrand in¬
formed, and in return he kept New York informed; Washington was
advised by Larkin. Despite some criticism by Nazi comptroller
Hans-Joachim Caesar, Vichy had under French law the power to
close the Paris branch at any minute if New York so instructed.
No such instructions were ever received.

When the local branch of the New York Guaranty Trust Bank
refused to deal with the Nazis, Niedermann unsuccessfully urged
its managers to agree to the demands. In a report marked 1942 (no
month or date), Albert Bertrand wrote to Larkin from Vichy, “The
present basis of our relationship with the authorities of Germany
is as satisfactory as the modus vivendi worked out with German
authorities by Morgan’s.* We anxiously sought and actually ob¬
tained substantial deposits of German funds . . . which funds were
invested by Chase in French treasury banks to produce additional

*The Morgan Bank also stayed open in Paris throughout the war, with New
York’s knowledge.

THE CHASE NAZI ACCOUNT

income.” Reports to New York during the war gave repeated state¬
ments by Nazi bank comptroller H-J Caesar of the high esteem in
which the German authorities held Chase and even had minutes
of meetings between the Chase people and Caesar. In one response
from New York, date and signator not given in the secret Treasury
report recently declassified, an American officer of the bank in Man¬
hattan described Chase as “Caesar's beloved child.” All of this was
known to the U.S. Embassy in Vichy, and to Washington. But noth¬
ing was done.

A Treasury report in Morgenthau’s files dated December 20,
1944, reveals that Carlos Niedermann was an outright collaborator
with the Nazi government; that Larkin knew this but took no steps
to remove him; that Larkin viewed Niedermann's good relations
with the Germans as an excellent means of preserving, unimpaired,
the position of the bank in France; that the Nazis took exceptional
measures to provide sources of revenue for the bank; that they de¬
sired to be friends with the American banks “because they expected
that these banks would be useful after the war as an instrument of
German policy in the United States”; and that the Chase zealously
maintained, with authorization from New York, the account of the
German Embassy under Otto Abetz in Paris, “as every little thing
helps to maintain excellent relations between Chase and the Ger¬
man authorities.”

Meanwhile, on December 24, 1943, Winthrop Aldrich, the
Chase, Leonard J. Smit, and his company were indicted for viola¬
tions of the freezing order on shipments to foreign nationals in the
matter of the diamond accounts and Smit and his company paid
fines of over $100,000; Smit went to prison for five years. In the
midst of the indictments, Aldrich was often closeted with the Presi¬
dent, discussing his activities on behalf of Allied war relief.

Attorney General Francis Biddle was miserably slow in dealing
with the indictment and bringing the Chase to trial. It was only
through Morgenthau and his team of Treasury agents that the mat¬
ter was brought up at all.

In a note from Harry Dexter White to Morgenthau dated January
24, 1945, White warned that if the Department of Justice “contin¬
ued in its delaying tactics,” the case “would have no meaning.” He
blamed Biddle for being swayed by “pressures from Chase.” Simul¬
taneously, now that Paris had fallen to the Allies, Morgenthau sent

TRADING WITH THE ENEMY

a team into Paris to investigate the Chase records. The team discov¬
ered a new and shocking fact. It found that at the time of the fall
of Paris in June 1940, S. P. Bailey, U.S. citizen and manager of the
Paris office, had announced to Larkin that he would “immediately
liquidate the branch in the interests of patriotism.” Larkin had
thereupon revoked Bailey’s powers and conferred authority on the
known Nazi collaborators who continued in office.

It also turned out that Larkin’s staff were sending instructions
to the bank direct until six months after Pearl Harbor and that they
refused to exercise their right to veto on any transactions from that
moment and remained in possession of monthly reports. They even
took a step further by having American accounts at Chase in Paris
blocked while the Nazi accounts remained open. There are records
of Carlos Niedermann and his colleagues being in direct touch with
Emil PuhFs office at the Reichsbank, offering to be “at your disposal
to continue to undertake the execution of banking affairs in France
for your friends as well as for yourselves.”

In 1945, as soon as he got wind of Treasury’s full-scale inquiry,
Aldrich rushed Joseph J. Larkin there to fire Niedermann immedi¬
ately and clean the nest. He issued statements to the U.S. govern¬
ment that there was “no connection’’ between Paris and Chase after
the United States entered the war. Larkin’s so-called job “to get to
the bottom of the situation and make the necessary adjustments in
personnel’’ was clearly just a way of covering the fact.

Ln a telegram marked “Secret” and dated January 12, 1945, the
U.S. Embassy in Paris advised Cordell Hull and Henry Morgenthau
of a meeting with Larkin. Larkin had done his best to save Aldrich.
Greatly agitated, he had told the ambassador,

Aldrich and the board are very much concerned about the situ¬
ation. The investigation.... I must emphasize that the manag¬
ing personnel left in Paris were not officers of the Chase Bank.

Chase New York wants the Chase Bank here open for the
use of the Army. My mission is semi-official. I have been tem¬
porarily billeted by the Army. I promise my full cooperation
with you. The Bank’s interests and the government’s are
identical. Both desire to maintain American prestige in
France.

THE CHASE NAZI ACCOUNT

And then he added a revealing piece of information: “The Brit¬
ish government had a good attitude toward British banks abroad.
British banks in Paris did big business during the Occupation.”

The fact that Britain had also collaborated with Nazi Germany
on an official level was scarcely encouraging to the embattled Secre¬
tary of the Treasury. However, there is no evidence that he did any¬
thing whatsoever about Larkin.

A curious event followed. Aldrich dispatched Alfred W. Barth,
the prime negotiator in the transactions of Leonard Smit and the
Riickwanderer scheme, to Europe to clean up any further “misun¬
derstandings” about the role of the Chase in dealing with the enemy.
A flurry of memoranda went to and from every department of State
and Treasury in 1945 as to whether Barth should be allowed to
travel to neutral countries. Apparently one of his purposes was to
“uncover secreted German assets”! Morgenthau and White tried
without success to stop the mission. Barth proceeded to Spain.

On April 17, 1945, the Chase National Bank of New
York—Aldrich being excused (and Larkin not named)—was placed
on trial in federal court on charges of having violated the Trading
with the Enemy Act in connection with its handling of the Smit dia¬
mond accounts. In his opening statement, U.S. Attorney John F.
X. McGohey charged the bank with having failed to freeze the ac¬
counts. Defense Attorney John T. Cahill placed before the jurors
a substantial volume crammed with documents purporting to deal
with the alleged violations of the regulations. Cahill said, “Opera¬
tions under freezing orders are complicated. Much more so even
than operations under your family rationing books. They are, unfor¬
tunately, as involved as operations under the Federal Income Tax
Law, and it would be as impracticable for all members of the bank
staff to become expert in them as it would for such a group to master
all the intricacies of income tax legislation.”

In other words, he was saying that the unfreezing of the accounts
was due to natural incompetence.

Be that as it may, Cahill overlooked the fact that Smit had already
pleaded guilty to trading with the enemy and had paid $110,000
in fines and was serving a jail sentence. Also, that such commit¬
ments at the time could scarcely have been unknown to certain offi¬
cials in the bank.

The trial was complicated and technical. James E. Healey, Jr.,

TRADING WITH THE ENEMY

vice-president of the Chase National in charge of its Panama
branches, testified he had believed that the freeze order was not ap¬
plicable to the transfer of funds from abroad to the Chase Bank
branch in Panama. Fred C. Witty, another vice-president, testified
that nothing official had come to his attention to indicate there was
anything wrong with the unblocking of the account. Other officers
testified that they had never received orders from the Federal Re¬
serve Bank to block any accounts.

Meanwhile, as the trial went on, Winthrop Aldrich, who was not
actually prosecuted in the trial, protested wherever he could be
heard that the trial was “absurd” and “based on a technicality.”
On May 5, 1945, at 3:55 P.M., the jury, after twelve hours of deliber¬
ation on three weeks of complicated testimony, acquitted the bank.
Aldrich expressed his extreme satisfaction in an interview with The
New York Times. The matter of the proven dealings of Chase that
conclusively established wartime connections with the enemy, in¬
cluding the continuing activities of the Chase Bank in Paris, were
neither made public nor were even made the subjects of Senate or
Congressional investigation. Once more, the ranks of government
closed around The Fraternity. And in 1946, Joseph J. Larkin ap¬
pointed Albert Bertrand, collaborationist head of the Chase in
Vichy, to the board of the Chase in Paris.

The Secrets of Standard Oil

In 1941, Standard Oil of New Jersey was the largest petroleum cor¬
poration in the world. Its bank was Chase, its owners the Rockefel¬
lers. Its chairman, Walter C. Teagle, and its president, William S.
Farish, matched Joseph J. Larkin’s extensive connections with the
Nazi government.

Six foot three inches tall, and weighing over two hundred and
fifty pounds, Walter C. Teagle was so large a man that it was said
that when he stood up from his seat on the subway, it was to make
room for two women. He smoked Havana cigars through a famous
amber holder. He spoke with measured deliberation, fixing his fel¬
low conversationalists with a frightening, unblinking, and powerful
stare.

Teagle came from a prominent Cleveland family just below the
millionaire class. He early showed a dominant will, expressed in a
thunderous voice, a humorless intensity, and a rugged disrespect
for those who questioned his judgment. He was known as a domi¬
nant presence at Cornell. Kept out of football by an injury, he
worked off his colossal energy in school debates, which he invariably
won hands down. Entering the Standard Oil empire under the wing
of John D. Rockefeller I, he rose rapidly through his Horatio Alger
concern for work and his strong international sense: he drew many
foreign countries and their leaders into the Standard Oil web. He
weathered scandal after scandal in which Standard stood charged
with monopolistic and other illegal practices.

From the 1920s on Teagle showed a marked admiration for Ger¬
many’s enterprise in overcoming the destructive terms of the Ver¬
sailles Treaty. His lumbering stride, booming tones, and clouds of
cigar smoke became widely and affectionately known in the circles
that helped support the rising Nazi party. He early established a
friendship with the dour and stubby Hermann Schmitz of I.G. Far-
ben, entertaining him frequently for lunch at the Cloud Room in
the Chrysler Building, Teagle’s favorite Manhattan haunt of the late

TRADING WITH THE ENEMY

1920s and the 1930s. Teagle also was friendly with the pro-Nazi
Sir Henri Deterding of Royal Dutch-Shell, who agreed with his
views about capitalist domination of Europe and the ultimate need
to destroy Russia.

Teagle, Schmitz, and Deterding shared a passion for grouse
shooting and game hunting; they vied with each other as wing shots.
Teagle’s love of hunting deer and wild birds was to earn him the
admiration of Reichsmarschall Hermann Goring.

Teagle was close to Henry Ford. He first met him in the early
1900s when he wanted to make a deal for oil with a new Detroit
auto assembly shop. He walked into the shop, saw how miserably
rundown it was, and decided that he would have difficulty in collect¬
ing for the gasoline contract. But he took a chance on the thin, gaunt
proprietor and went ahead. Many years later the two men met again
and formed a friendship. Ford looked at him sharply and said,
“We’ve met before.” Teagle remembered at once. “Sure,” Teagle
said, “I sold you your first gasoline contract. You were stripping
down a Winton chassis.” Ford replied, “I was. And I was so hard
up, I didn’t even own the goddam thing!”

Because of his commercial and personal association with Her¬
mann Schmitz, and his awareness that he must protect Standard’s
interest in Nazi Germany, Teagle made many visits to Berlin and
the Standard tanks and tank cars in Germany throughout the 1930s.
He became director of American I.G. Chemical Corp., the giant
chemicals firm that was a subsidiary of I.G. Farben. He invested
heavily in American I.G. and American I.G. invested heavily in
Standard. He sat on the I.G. board with Fraternity brothers Edsel
Ford and William E. Weiss, chairman of Sterling Products.

Following the rise of Hitler to power, Teagle and Hermann
Schmitz jointly gave a special assignment to Ivy Lee, the notorious
New York publicity man, who had for some years worked for the
Rockefellers. They engaged Lee for the specific purpose of economic
espionage. He was to supply I.G. Farben, and through it the Nazi
government, with intelligence on the American reaction to such
matters as the German armament program, Germany’s treatment
of the Church, and the organization of the Gestapo. He was also
to keep the American public bamboozled by papering over the more
evil aspects of Hitler’s regime. For this, Lee was paid first $3,000
then $4,000 annually, the money paid to him through the Bank for

THE SECRETS OF STANDARD OIL

International Settlements in the name of I.G. Chemie. The contract
was for obvious reasons kept oral and the money was transferred
in cash. No entries were made in the books of the employing compa¬
nies or in those of Ivy Lee himself. After a short period Lee’s salary
was increased to $25,000 per year and he began distributing inflam¬
matory Nazi propaganda in the United States on behalf of I.G. Far-
ben, including virulent attacks on the Jews and the Versailles Trea¬
ty.

In February 1938 the Securities and Exchange Commission held
a meeting to investigate Nazi ownership of American I.G. through
a Swiss subsidiary. The commissioners grilled Teagle on the owner¬
ship of the Swiss company. He pretended that he did not know the
owners were I.G. Farben and the Nazi government. The commis¬
sioners tried to make him admit that at least American I.G. was
“controlled by ‘European’ interests.** Teagle replied dodgily, “Well,
I think that would be a safe assumption.*’ Asked who voted for him
as a proxy at Swiss meetings, again he asserted that he didn’t know.
He also neglected to mention that Schmitz and the Nazi government
owned thousands of shares in American I.G.

Teagle was sufficiently embarrassed by the hearing to resign from
the American I.G. board, but he retained his connections with the
company. He remained in partnership with Farben in the matter
of tetraethyl lead, an additive used in aviation gasoline. Goring’s
air force couldn’t fly without it. Only Standard, Du Pont, and Gen¬
eral Motors had the rights to it. Teagle helped to organize a sale
of the precious substance to Schmitz, who in 1938 traveled to Lon¬
don and “borrowed” 500 tons from Ethyl, the British Standard sub¬
sidiary. Next year, Schmitz and his partners returned to London
and obtained $15 million worth. The result was that Hitler’s air
force was rendered capable of bombing London, the city that had
provided the supplies. Also, by supplying Japan with tetraethyl,
Teagle helped make it possible for the Japanese to wage World War
II.

There was a further irony. The British Royal Air Force had to
pay royalties to Nazi Germany through Ethyl-Standard for the gas¬
oline used to fly Goring’s bombers that were attacking London. The
payments were held in Germany by Farben’s private banks for Stan¬
dard until the end of the war.

Following the embarrassment of the Securities and Exchange

TRADING WITH THE ENEMY

Commission hearing, Teagle took more and more of a backseat and
handed over his front office to his partner and close friend, William
Stamps Farish. Farish was somewhat different in character from
Teagle. Tall, bald from youth, bespectacled, given to publishing
homilies and pious patriotic articles in the pages of American Maga¬
zine, he had a reserved, almost scholarly manner that barely con¬
cealed a flaring temper and a fierce self-protectiveness that made
him seem guilty in controversies over Standard when he was not
necessarily so. He was so emotionally locked into the company that
he was indivisible from it. He never understood a rule of power:
to keep calm and polite when the opposition is angry and threaten¬
ing. He could not resist striking back at anyone who criticized him,
sometimes with a rather feeble attempt at physical violence. He
shared with Teagle a mania for salmon fishing, dog training,
bird-dogging, quail shooting, and fox hunts. Like Teagle, he devoted
as much as eighteen hours a day to office affairs, immense journeys
by ship and train, and board meetings that sometimes went on into
the small hours of the morning. Both had the capacity of senior ex¬
ecutives to exhaust everyone but themselves with their certainties.
They allowed little area for discussion and brooked nothing save
approval.

Farish, like Teagle, was mesmerized by Germany and spent much
time with Hermann Schmitz. With Teagle’s approval he staffed the
Standard Oil tankers with Nazi crews. When war broke out in Eu¬
rope, he ran into trouble with British Intelligence, which boarded
some of his vessels outside territorial waters on the Atlantic and
Pacific seaboards and seized Nazi agents who were passengers.
When the British began interrogating Nazi crews on the Hit¬
ler-Standard connection, Farish fired the Germans en masse and
changed the registration of the entire fleet to Panamanian to avoid
British seizure or search. His vessels carried oil to Tenerife in the
Canary Islands, where they refueled and siphoned oil to German
tankers for shipment to Hamburg. They also fueled U-boats even
after the American government declared such shipments morally
indefensible and while Roosevelt was fighting an undeclared war
in the Atlantic. Standard tankers supplied the self-same submarines
which later sank American ships. By a humorous twist of fate, one
of the ships the U-boats sank was the S.S. Walter Teagle.

It was important for the Nazis to convert the oil in the Canaries

THE SECRETS OF STANDARD OIL

to aviation gasoline for the Luftwaffe. Once again, Farish proved
helpful. As early as 1936 his associate Harry D. Collier of California
Standard had built units for conversion in the Canaries. Simulta¬
neously, Teagle had £>iuilt a refinery in Hamburg that produced
15,000 tons of aviation gasoline for Goring every week.

With war in Europe, General Aniline and Film, successor to
American I.G., stood in danger of being taken over by the U.S. gov¬
ernment. Teagle and Farish’s friend, the Rockefeller associate Sos-
thenes Behn of ITT, was narrowly stopped from buying the corpo¬
ration, thus rendering it “American” and not subject to seizure.
Henry Morgenthau prevented the deal. For once, The Fraternity
was frustrated. Teagle and Farish could not buy GAF themselves,
as it would have too clearly betrayed their association with the
Nazis.

By 1939, Americans were dangerously short of rubber. The
armed services were hard put to complete wheels for planes, tanks,
and armored cars. At this time Standard Oil had made a deal with
Hitler whereby he would obtain certain kinds of Standard artificial
rubber and America would get nothing. This deal continued until
after Pearl Harbor.

When war broke out, Frank A. Howard, one of the more dynamic
vice-presidents of Standard (also on the board of Chase), flew to
Europe with Farish’s authorization. In London he held an urgent
meeting with U.S. Ambassador Joseph P. Kennedy, who allegedly
wanted to negotiate a separate peace that would bring the European
war to an immediate end. Kennedy enthusiastically approved How¬
ard’s meeting with Farben’s representative Fritz Ringer. The meet¬
ing was set up in Holland. Howard flew to The Hague on September
22, 1939, supplied with a special Royal Air Force bomber for the
occasion.

At the Hague meeting, held in the Standard Oil offices, Howard
and Ringer talked for many hours about their plans for the future.
Ringer handed over a thick bundle of German patents that were
locked into Standard agreements so that they would not be seized
in wartime. The two men drew up an agreement that specified they
would remain in business together, “whether or not the United
States came into the war.” Another clause in the agreement known
as the Hague Memorandum guaranteed that the moment war was
over, LG. Farben would get back its patents. Howard returned to

TRADING WITH THE ENEMY

London and Kennedy arranged for the patents to be flown by Amer¬
ican diplomatic bag to Ambassador William Bullitt in Paris, who
forwarded them on by special courier to Farish in New York.

As the war continued in Europe before America’s entry, Ger¬
many grew more and more desperate for oil. Her domestic supplies
were minimal. But for many years Teagle and Farish had exploited
the resources of Rumania, setting up extensive oil exploration in
the Ploie§ti fields and netting millions from Germany in the process.
I.G. Farben financed the notorious Rumanian Iron Guard, a fascis-
tic military organization led by General Ion Antonescu. Hermann
Schmitz, through Antonescu and in league with Standard, held an
exercising control over the oil fields. On May 5, 1941, Goring ar¬
ranged a special private performance of Madame Butterfly by the
Austrian State Opera at the Belvedere Palace in Vienna in Antone-
scu’s honor. After the performance, Goring sat down for an urgent
discussion with Antonescu on securing the use of the Standard Oil
fields if Germany and America should go to war. Antonescu con¬
ferred with Schmitz and Standard executives in Bucharest. The re¬
sult of the meeting was that Goring paid $11 million in bonds for
the use of the oil, whether or not America came into the war.

Farish now proceeded to make another deal with Goring. Hun¬
gary was second only to Rumania as an oil source for the Nazi war
machine. Teagle had started drilling there in 1934.

In July 1941, Farish and Frank Howard filed an application with
Treasury for a license to sell its Hungarian subsidiary to I.G. Far¬
ben. Farben would, the application said, pay $5.5 million in Swed¬
ish, Swiss, and Latin American currencies, $13.5 million in gold to
be delivered at Lisbon, Portugal, and later shipped to the United
States; and it would supply a promissory note for $5 million by I.G.
“to be paid three months after the war ended.” This note was to
be secured by the blocked assets of General Aniline and Film in
America. Treasury refused the application, whereupon Farish asked
if the full amount could be paid in gold at Lisbon. That suggestion
also was rejected. Farish protested bitterly.

The British blockade ran the length of the Americas upon the
Atlantic seaboard, stopping shipments to Nazi Germany wherever
possible. Given the problem, how could Farish go on supplying Go¬
ring and Hermann Schmitz with oil in time of war? He soon found
the solution. He sent large amounts of petroleum to Russia and

THE SECRETS OF STANDARD OIL

thence by Trans-Siberian Railroad to Berlin long after Roosevelt’s
moral embargo. He shipped to Vichy North Africa. In May 1940,
British authorities captured a French tanker in U.S. territorial wa¬
ters that was sailing to Casablanca with 16,000 tons of Standard
oil, allegedly for reshipment to Hitler. Cordell Hull demanded the
British government yield up the tanker. Restricted by maritime law,
the British agreed. The tanker sailed on to Africa, followed by six
more.

Farish fueled on the Nazi-controlled L.A.T.I. airline from Rome
to Rio via Madrid, Lisbon, and Dakar. The airline flew spies, pat¬
ents, and diamonds for foreign currency. Only Standard could make
this shipment possible. Only Standard had the high-octane gasoline
that enabled the lumbering clippers to make the 1,680-mile hop
across the Atlantic.

A hard-working young man, William La Varre of the Depart¬
ment of Commerce, set about uncovering Standard’s deals with this
Nazi airline. He knew L.A.T.I. was the means by which the Nazis
evaded the British blockade. The airline was not subject to boarding
and search. Spies traveled by L.A.T.I. between the United States,
Germany, and Italy by way of Brazil.

In addition to spies, the planes flew, in 1941, 2,365 kilos of books
containing Nazi propaganda, legal and illegal drugs addressed to
Sterling Products, Reichsbank money for the National City Bank
in New York, wartime horror pictures prepared by Dr. Joseph
Goebbels to frighten Latin Americans out of a world conflict. There
were electrical materials and gold and silver jewelry for sale to Bra¬
zil. American companies in South America shipped the Nazis thou¬
sands of kilos of mica and platinum, which existed in quantity only
in Brazil, and which were strategic war materials for Germany.
Semiprecious stones were bought cheaply, shipped to Germany, cut
in Belgium in slave camps, and shipped back to Brazil for sale.

In order to supply the airline, Farish changed more of his vessels
from German to Panamanian registry. Now they were granted im¬
munity under the Panamanian flag by James V. Forrestal, Under
Secretary of the Navy, vice-president of General Aniline and Film,
and Fraternity member. But U.S. Intelligence constantly checked
on the members of the Gestapo, the Abwehr, and the Farben spy
network N.W.7. who used the airline. Early in 1941, Adolf Berle
of the State Department insisted that Cordell Hull stop these ship-

TRADING WITH THE ENEMY

ments. Hull talked to William Farish. He told him he was going
to apply export control to the shipments.

Farish was forced to reach a compromise. He would supply
L.A.T.I. and the other Nazi arline, Condor, through Standard’s
Brazilian subsidiary with permission from the American ambassa¬
dor in Rio. The ambassador gave permission and the airlines contin¬
ued to fly. It was not until just before Pearl Harbor that La Varre
and Berle realized what Farish was doing: By making the deal
through the Brazilian company, he was not subject to blacklisting.
Thus, the shipments continued until after Pearl Harbor when the
Brazilian government stepped in and closed down the airlines. Far¬
ish totally ignored his government’s request to be loyal. Germany
and money came first.

On March 31, 1941, Sumner Welles of the State Department
stepped into the picture with a detailed report on refueling stations
in Mexico and Central and South America that were suspected of
furnishing oil to Italian or German merchant vessels now in port.
Among those suspected of fueling enemy ships were Standard Oil
of New Jersey and California. There is no record of any action being
taken on this matter.

On May 5, the U.S. Legation of Managua, Nicaragua, reported
that Standard Oil subsidiaries were distributing Epoca, a publica¬
tion filled with pro-Nazi propaganda. John J. Muccio, of the U.S.
Consulate, made an investigation and found that Standard was dis¬
tributing this inflammatory publication all over the world. By a pe¬
culiar irony, Nelson Rockefeller was at that moment in his post of
Coordinator of Inter-American Affairs, seeking to insure the loyalty
to United States interests of all of the governments of Latin Ameri¬
ca.

On July 17, 1941, Nelson Rockefeller had joined with Dean Ach-
eson, Morgenthau, Francis Biddle, and Secretary of Commerce
Jesse Jones to fulfill a presidential order to prepare what was known
as the Proclaimed List of enemy-associated corporations with which
it was illegal to trade in time of European war. Acheson was ap¬
pointed chairman of the interdepartmental committee in charge of
the group of Cabinet members. Six months later, in a lengthy memo¬
randum to Milo R. Perkins, executive director of the Economic De¬
fense Board, on January 5, 1942, Acheson laid down the conditions
of the Proclaimed List. Rockefeller’s claim that he was unfamiliar

THE SECRETS OF STANDARD OIL

with the details of Standard Oil practices on behalf of the Axis be¬
fore and after Pearl Harbor is difficult to believe given the fact that
he himself sat on the Proclaimed List committee.

In his official capacity. Nelson Rockefeller was in the peculiar
position of having to ask the managers of his South American com¬
panies how many Germans they employed, despite the fact that his
company and official records both contained the information. He
was one thing as coordinator and quite something else as Standard
Oil executive. In July 1941, Standard, with his knowledge, autho¬
rized the continuance of the lease of its headquarters in Caracas,
Venezuela, from a Proclaimed List national, Gustav Zingg, because
it would be legally very difficult to terminate the lease. The Coordi¬
nator of Inter-American Affairs, with billions at his disposal, leased
from a Nazi collaborator for the duration because of a technical
issue of a leasing arrangement. More surprising still, a doctor who
was in constant touch with Nazis in Caracas, and was on a suspect
list, was permitted to remain a member of the medical department
of Standard Oil of Venezuela.

On July 15, 1941, Major Charles A. Burrows of Military Intelli¬
gence reported to the War Department that Standard Oil was ship¬
ping oil from Aruba in the Dutch West Indies to Tenerife in the
Canary Islands. The report continued:

[Standard] is . . . diverting about 20 percent of this fuel oil to
the present German Government. About six of the ships oper¬
ating on this route are reputed to be manned mainly by Nazi
officers. Seamen have reported to the informant that they have
seen submarines in the immediate vicinity of the Canary Is¬
lands and have learned that the submarines are refueling there.
The informant also stated that the Standard Oil Company has
not lost any ships to date by torpedoing as have other Ameri¬
can companies whose ships operate to other ports.

On July 22, 1941, there was a meeting of several Treasury officials
with Acheson on the subject of oil shipments to Tangier, including
those of Standard Oil. Tangier was an open port that was leaking
supplies to the Nazis. The meeting was inconclusive. Among the
subjects discussed was the possible sale by Standard Oil of its Berlin

TRADING WITH THE ENEMY

property. There was no real pressure on the corporation to dispose
of that office.

On October 28, 1941, Cordell Hull sent a peculiar letter to Trea¬
sury’s Edward H. Foley, Jr., who was acting in Morgenthau’s ab¬
sence on vacation. Hull asked Foley whether “Standard Oil Com¬
pany (New Jersey) may, through its subsidiaries in the other
American republics, sell or deliver petroleum or petroleum prod¬
ucts, to have other dealings with” persons whose names appeared
on the blacklist of Nazi collaborators! Incredibly, he even asked
whether Standard Oil might, through its subsidiary, Standard Oil
of Brazil, sell petroleum to Nazi Condor, largely from Aruba. The
reply was almost as surprising. Foley said that such transactions
fell under Executive Order 8389 and “such transactions, irrespec¬
tive of whether they are provided for by contract, should not be en¬
gaged in except as specifically authorized by the Secretary of Treasury
under Executive Order 8389. ”* What Foley was pointing out was
that it would be quite possible to trade with Nazi associates with
Treasury’s specific approval.

This arrangement did not change with Pearl Harbor. Acting in
collusion, Treasury and State continued to issue licenses permitting
Standard Oil and other corporations to trade with enemy collabora¬
tors in time of war.

Over three weeks after Pearl Harbor, on December 31, 1941,
Warren E. Hoagland of Standard wrote to Green H. Hackworth,
legal advisor to the Department of State, asking which foreign coun¬
tries and their residents and corporations should be considered as
allies of the enemy. In reply, Hackworth informed him that the De¬
partment had “not issued a list of enemy or allied enemy countries.”
Hackworth’s note, dated January 6, 1942, contains a touch of un¬
conscious humor: “The Congress of the United States has, you
doubtless are aware, declared that a state of war exists between the
governments of Japan, Germany, and Italy and the Government
and people of the United States.” The letter goes on to refer Hoag¬
land to the presidential license dated December 13, 1941 permitting
transactions prohibited by the Trading with the Enemy Act, pro¬
vided such trading was authorized by the Treasury.

Immediately after Pearl Harbor, Harold Ickes, Secretary of the

Athuor’s italics.

THE SECRETS OF STANDARD OIL

Interior and Petroleum Administrator and Coordinator for Na¬
tional Defense and War, began to close in on Farish because of his
dealings with Nazi Germany. Farish, who already had savage ene¬
mies in Morgenthau and Harry Dexter White, had an even more
formidable foe in Ickes.

Ickes was popularly known as the Old Curmudgeon: an inspired
if irritating gadfly who was almost certainly the most unpopular ce¬
lebrity of his day in America. A tense, dark, sharp-eyed, impatient
man, he deliberately put his worst foot forward on every possible
occasion in the hope of provoking widespread fury and the maxi¬
mum amount of publicity. He began life with a hatred of the privi¬
leged: he was the second of seven children of an impoverished Penn¬
sylvania sharecropping family and spent his childhood sweeping
and dusting, washing dishes, kneading dough, basting beef, and flip¬
ping flapjacks. He was pinch-hit nursemaid, woodchopper, fire
builder, and chicken executioner. In 1890, working as a clerk in his
uncle’s Chicago drugstore, he was so sickened by the rich with their
coachmen, footmen, and high-stepping horses that he mixed seidlitz
powders so they would explode in the faces of hated wealthy cus¬
tomers. He became a journalist, writing muckraker articles in Chi¬
cago that helped run political gangs out of town. He sharply at¬
tacked what he called the “turbulent, grasping, selfish men”
personified by Farish and Teagle. His greatest moment was when
Roosevelt offered him the post of Secretary of the Interior with the
words “Mr. Ickes, you and I have been speaking the same language
for the past twenty years. I have come to the conclusion that the
man I want is you.”

Fiercely committed to Roosevelt, Ickes spent much of the war
years with his legs knotted together under a battle-scarred desk
from his reporting days, banging away at his ancient typewriter and
producing reams of rude letters, newspaper column squibs, interof¬
fice memoranda, and diary entries savaging the trusts led by the
Rockefellers. He would frequently break off from watering or
cross-pollinating his prized dahlia collection to pick up a phone and
shower the hated Secretary of Commerce Jesse H. Jones or Walter
C. Teagle with a blistering rain of invective. He became known as
Roosevelt’s conscience. He maddened Roosevelt by his refusal to
compromise; his “cumbrous honesty”—as Heywood Broun called
it—which led him to disrupt the delicate relationship Roosevelt had

TRADING WITH THE ENEMY

established with the Standard Oil leaders to turn them to his own
uses.

Ickes constantly complained to Roosevelt that Teagle and Farish
were prominent on various government boards including the War
Petroleum Board and that American car owners were forming gas
lines while the Germans and Japanese had all the gas they needed.
Roosevelt was furious.

On June 22, 1941, Roosevelt sent Ickes a rude and peremptory
letter on the matter of his restricting oil. He pinned his ears back
once and for all by instructing him to release the shipments by ar¬
rangement with Cordell Hull. That same day Ickes wrote in his
diary (a statement that was censored out of the published version)
that for two years now the President had broken promise after
promise to him and that he had even begun to lie to him unashamed¬
ly. He added that he had often wondered if he could not be of greater
assistance to the people on the outside by telling the truth, rather
than staying inside, helping to deceive. He was referring to the fact
that Roosevelt and Hull were lying to the public about the extent
of exports to belligerent powers.

More and more in 1941, Ickes was cut down by pressure from
Standard Oil on the State Department. In June, State set up a Carib¬
bean division without even consulting him. This allowed shipments
to Axis-influenced neutral countries from Standard and other wells
in Venezuela for transshipment via the refineries in Aruba.

Three and a half weeks after Pearl Harbor, Ickes really had his
fingers chopped off. Without telling him, Roosevelt set up a commit¬
tee under the Economic Warfare Council (later the Board of Eco¬
nomic Warfare), which was to handle all duties and responsibilities
in the matter of exporting petroleum products. To Ickes’s horror,
William S. Farish’s right-hand man, Max Thornburg, was ap¬
pointed Foreign Petroleum Coordinator, with Farish and Harry D.
Collier on the board. Thornburg, a smart executive, received $8,000
a year from the State Department for his job—and $13,000 a year
from Standard.

Ickes was so maddened by this sign of alleged corruption and col¬
lusion that he called Vice-President Henry Wallace at home on Jan¬
uary 4, 1942, demanding to know why Wallace, as Economic War¬
fare Council chairman, could tolerate such an arrangement. Ickes
charged Thornburg with being ambitious, not overscrupulous, ca-

THE SECRETS OF STANDARD OIL

pable of being disloyal; he insisted to Wallace that Thornburg had
schemed for the appointment and even presented Roosevelt with
the letter authorizing his appointment, standing over the President
while it was signed. He said this indicated the degree of influence
Standard had at the White House. Wallace did not reply.

Throughout the early months of 1942, Ickes kept hammering
away at Wallace to have Thornburg dismissed. Frustrated in his
efforts, he charged Wallace with “trampling on his enemies and be¬
traying his friends.” His hatred for Wallace matched his hatred for
Thornburg. With his stubborn sense of integrity he simply did not
understand that in order to win the war, Roosevelt and Wallace had
to get into bed with the oil companies.

As a result of his needling, Ickes was forbidden by Roosevelt and
Wallace to attend meetings held by Thornburg and Teagle to which
agencies of the government involved in oil were invited. Ickes was
under constant threat from Roosevelt not to interfere with anything
that happened. He was tempted to resign and indeed drafted his res¬
ignation on several occasions but finally decided to dig in. and fight
the Establishment. Through his spies he unraveled the fact that Sec¬
retary of Commerce Jesse Jones and Bill Farish were interlocked
in business interests in Texas. And at last he found an ally who had
the courage to confront the President and the pro-Standard chief
in Washington head on: Thurman Arnold.

Arnold was a man after Ickes’s own heart. He was a grass-roots
all-American publicity hound who had worked his way up to be¬
come head of the Antitrust Division of the Department of Justice.
A heavyweight like Walter Teagle and Farish, he could face these
men eyeball-to-eyeball. Shock-haired, ruddy-cheeked, with im¬
mense shoulders, he would argue or laugh over a dirty joke with
vehemence, spewing out a stream of witty, filthy words through a
heavily chewed cigar. He was described as looking like a small-town
storekeeper and talking like a storm trooper. He was a tough home¬
steader, former major of Laramie, Wyoming, and a cattle-country
lawyer of the old school. Like Ickes and Morgenthau, he hated the
Big Guys. He was a bitter enemy of corruption. After only a few
months in office he cleaned up the building industry, bringing in
74 indictments against 985 defendants. He was accompanied every¬
where by his beloved dog, Duffy Arnold. He was so boastful that
at one White House banquet, he said to fellow trustbuster Norman

TRADING WITH THE ENEMY

Litteil, “You know, I*m the most famous Arnold that ever lived.”
“How about Benedict?” LittelPs wife quipped.

During the first weeks after Pearl Harbor, Arnold drove his 1930
La Salle automobile with its shaky rear end through the streets of
Washington to a series of meetings with Ickes at Ickes’s house. As
a result of those meetings Arnold obtained permission from the ner¬
vous and weak Attorney General Francis Biddle to hold a meeting
with Farish in the matter of the synthetic rubber restrictions that
favored Germany still and drastically inconvenienced American
motorists and the Army, Navy, and Air Force.

On February 27, 1942, Arnold, with documents stuffed under his
arms, followed by his loyal team of secretaries and aides, strode into
the lion’s den of Standard at 30 Rockefeller Plaza. Just behind him
were Secretary of the Navy Franklin Knox and Secretary of the
Army Henry L. Stimson. William S. Farish was there to greet them.
In the boardroom Arnold sharply laid down his charges while the
others looked hard at him. He spelled it out that he had the goods
on Standard: that by continuing to favor Hitler in rubber deals and
patent arrangements, the Rockefellers, Teagle, and Farish had acted
against the interests of the American government. Chewing his
cigar to pulp as he turned over the documents, Arnold coolly sug¬
gested a fine of $1.5 million and a consent decree whereby Standard
would turn over for the duration all the patents Frank Howard had
picked up in Holland.

Farish rejected the proposal on the spot. He pointed out that
Standard, which was fueling a high percentage of the Army, Navy,
and Air Force, was making it possible for American to win the war.
Where would America be without it? This was blackmail, and Ar¬
nold was forced into a defensive position. He conferred hastily with
Stimson and Knox. The result was that he asked Farish to what
Standard would agree. After all, there had to be at least a token
punishment. Farish said with icy contempt that he would pay
$50,000, to be divided equally among so long a list of executives
and corporations that each would wind up paying no more than
$600. Arnold, Stimson, and Knox soon realized they had no power
to compare with that of Standard. They did manage to reduce the
number of defendants to ten. Farish paid $1,000, or a quarter of
one week’s salary, for having betrayed America.

Standard underwent a process of law in the criminal courts of

THE SECRETS OF STANDARD OIL

Newark, New Jersey. This was a technicality in order to satisfy pub¬
lic opinion. The charges of criminal conspiracy with the enemy were
dropped in return for Standard releasing its patents and paying the
modest fine. Ickes wrote in his diary on April 5 that when the light
was thrown on a situation like this, it made it easier to understand
why some of the great and powerful in the country were
Nazi-minded and were confident of their ability to get along with
Hitler. After all, he added, they had been doing business with Hitler
right along. They understood each other’s language and their aims
were common. A complete exposure, he added, would have a very
good effect on the United States.

Arnold agreed. Although he had crumbled at the meeting at
Rockefeller Plaza, he had another recourse by which he could drag
Standard through the mud. He and Ickes had a sturdy ally in Harry
S Truman, an enemy of Jesse Jones. The Senator from Missouri was
in charge of the Truman defense committee, dedicated to exposing
treasonable arrangements. With great enthusiasm Give ’em Hell
Harry embarked on a series of hearings in March 1942, in order
to disclose the truth about Standard.

On March 26, Arnold appeared before Truman in an exception¬
ally buoyant mood in order to lay in front of the committee his spe¬
cific charges against the oil company. He had dug up a great deal
of dirt. He produced documents showing that Standard and Farben
in Germany had literally carved up the world markets, with oil and
chemical monopolies established all over the map. He flourished pa¬
pers showing that Farish had refused to send vital patent informa¬
tion to Canada because Germany and Canada were at war. He
showed how Farish had flagrantly disregarded Lend-Lease and
good neighbor policies in his connivance with Hitler. He zeroed in
on the subject of synthetic rubber, pointing out that it had been de¬
nied to the U.S. Navy, and that Farish and Howard had deliberately
sidetracked a Navy representative from seeing the processes. He
charged that cables showed Standard’s arrangements with Japan
that were to continue throughout any conflict or break in trade.
Leaving the Senate chamber on March 28, surrounded by lots of
reporters and photographers, Truman was asked, “Is this treason?”
He replied in the affirmative.

Farish completely lost his head. Instead of riding out the storm
with cool indifference and waiting for his appearance before the

TRADING WITH THE ENEMY

committee, he held press conferences, fired off telegrams from
Rockefeller Plaza to the President, issued lengthy and complicated
statements on the radio, and told The New York Times in a state¬
ment prepared by Teagle, who sat up all night to write it, that Ar¬
nold’s charges had “not a shadow of foundation.” Appearing before
the committee on March 31, he shouted at Truman and Arnold that
he repudiated everything said about Standard “with indignation and
resentment” and asserted that he had not in any way been disloyal
to the United States. He claimed that the deal with I.G. Farben
helped the United States since a number of patents were now in
America’s possession. He neglected to add that the only reason they
were in America’s possession was that a criminal court judge had
ordered them to be.

On April 2 a flushed and irritable Thurman Arnold came to
Ickes’s office from a further hearing in which Farish had repeated
his denials, and told him, “The Standard Oil guys have committed
perjury. I know it. I have reported it. Will they be indicted?” He
already knew the answer: They would not be indicted. Arnold went
on to denounce Secretary Jesse H. Jones to Ickes for complicity with
Standard in the whole matter.

Roosevelt was very unhappy with the hearings. Publicly exposing
Teagle and Farish was not helping him use them for America’s pur¬
poses. He had had enough of Arnold as the hearings concluded. He
kicked him upstairs to the U.S. Court of Appeals. Ickes wrote in
his diary on April 5 that Arnold had been more or less gagged. The
War and Navy departments ensured that Roosevelt suspended any
further antitrust actions against the corporations for the duration.
They couldn’t (as the Rockefeller Plaza meeting had made clear)
run an Army and Navy without Standard.

Teagle was so aggravated and distressed by the attacks of the Tru¬
man committee and Arnold that he sent Roosevelt a letter trying
to explain his position and tendering his resignation as chief of the
National War Labor Board. On April 2, 1942, Roosevelt wrote to
him, “My Dear Mr. Teagle: I have your letter of March 23rd about
resigning from the National War Labor Board. I hope you will not
do so as your work on the Board has been, and I know will prove
to be, of great service to the country. Your connection with the suit
against the Standard Oil Company does not in my opinion (and I
have discussed this with the Attorney General) afford a reason for

THE SECRETS OF STANDARD OIL

your withdrawing from the Board/’ But in September, Teagle, shat¬
tered by the further disclosures of the subsequent Bone committee,
again offered his resignation and Roosevelt this time accepted it
with the carefully put together statement, “I do want you to know
how much I appreciate the long months of hard work which you
have put in ... and the sincere and very valuable contribution you
have made to the war effort.”

Farish remained on the War Petroleum Board. On April 3, 1942,
Ickes called Roosevelt in the Oval Office. He protested against Par¬
ish’s being in that position, but Roosevelt instructed him not to ask
Farish to resign. That same day Ickes called John D. Rockefeller
II at home in Tarrytown. Despite Roosevelt’s statement Ickes de¬
cided to risk his job and ask Rockefeller to dismiss Farish from the
post on the theory that Rockefeller would want to clean his own
nest and escape the drastically unfavorable publicity caused by the
hearings. He began by telling Rockefeller that he knew of the rela¬
tionship between Standard and I.G. Farben. Rockefeller was silent.
Ickes went on , saying that public opinion would force him to take
action; that he was not recommending that Rockefeller get rid of
Farish but telling him in advance that an embarrassing situation
might develop with further hearings that would force Farish to do.

Rockefeller said that he had the utmost confidence in Farish and
Teagle; that he believed in their honesty, their sincerity, and their
patriotism. Rockefeller alleged that he took no active part in the
affairs of Standard and knew nothing of what was going on, despite
the existence of Schroder, Rockefeller, Inc. He added that he was
going to stand by these two men unless further facts convinced him
they were in the wrong. But he did not expect to discover that they
had been in the wrong. The Rockefellers, he said, always stood by
their friends; perhaps that was the reason why the Rockefellers had
so many friends.

Ickes said he didn’t want to make snap judgments, but in a situa¬
tion like this, where the administration was concerned, one had to
pay some attention to public opinion. He added that he had the peo¬
ple to consider, that the people be persuaded that the government
was not covering up or protecting any individual to the detriment
of the war effort. Unfortunately, as Ickes very well knew, that was
exactly what the government was doing.

The following day Truman came to lunch with Ickes. Truman

TRADING WITH THE ENEMY

said that Ickes ought to fire Farish immediately from the War Petro¬
leum Board. Ickes didn’t have the nerve to tell Truman that the
President had protected Farish. Instead he blamed the newspapers
for putting an effective lid on the stinking pot with the utmost celer¬
ity and dexterity. He told Truman that he had never seen a better
job of underplaying the news, except for the first stories that came
off the presses. He added that within his experience there had never
been a more complete justification of the charge that big business
and advertisers had tremendous influence with the press. He added,
in his diary for April 11, that there was no use in butting his head
against a stone wail.

Truman told the Secretary of the Interior he was drastically
against the monopolies. He condemned the dollar-a-year men who
were featherbedding their own industries at the government’s ex¬
pense. He promised to do what he could with further inquiries.

Ickes was not content. He prodded Senator Homer T. Bone into
the Patents Committee, which began hearings in the Senate on May
1. Bone shared the feistiness of Ickes, Arnold, and Truman when
it came to the question of Standard. On May 2, Arnold’s keenest
friend in the Antitrust, young Irving Lipkowitz, shoveled up still
more dirt: He could prove that Standard had deliberately retarded
production of the vital war material acetic acid in favor of the Nazis.
He charged Standard with being “I.G. Farben’s Charlie McCarthy
in the chemicals field.” Lipkowitz was followed by Senator Robert
M. La Follette, Jr., who denounced Teagle and Farish for issuing
“as despicable a piece of public relations work by a giant corpora¬
tion as I have ever seen.” He went on, “The Standard officials not
only did not have guts enough to come before this Committee today
where they could be sworn and cross-examined, but they left the
officials who made their denials anonymous.” He said that Standard
and Farish “adopted that age-old rule of debate, ‘when you are weak
on facts, give ’em hell.’ ”

On May 6, John R. Jacobs, Jr., of the Attorney General's depart¬
ment, testified that Standard had interfered with the American ex¬
plosives industry by blocking the use of a method of producing syn¬
thetic ammonia. As a result of its deals with Farben, the United
States had been unable to get the use of this vital process even after
Pearl Harbor. Also, the United States had been restricted in tech¬
niques of producing hydrogen from natural gas and from obtaining

THE SECRETS OF STANDARD OIL

paraflow, a product used for airplane lubrication at high altitudes.
Jacobs produced a document showing that on September 1, 1939,
the day Germany invaded Poland, Standard cabled Farben offering
$20,000 for its 20 percent interest in a Standard subsidiary handling
the patents they shared between them. Jacobs showed a Standard
memo that read, “Of course what we have in mind is protecting
this minority interest of I.G. in the event of war between ourselves
and Germany as it would certainly be very undesirable to have this
20 percent Standard-I.G. pass to an alien property custodian of the
U.S. who might sell it to an unfriendly interest.”

Jacobs revealed that it had been arranged that Farben in Ger¬
many should file applications in France and England for various
oil developments in Standard’s name during the war. Senator Bone
was so shocked by this disclosure that he called it “astounding” and
said, “If the war does nothing else, it ought to clean up a system
like this.” On May 7, Farish hailed the committee with a furious
telegram. He denied that he had avoided appearing and said that
he had sought to appear to clear the record but had been refused
permission. The telegram was several hundred words long and was
so complicated as to be virtually unreadable. As usual, Farish was
simply trying to confuse and bamboozle the committee, which was
in fact perfectly prepared to have him appear. It was quite obvious
that he preferred to shelter behind intricate and expensive telegrams
rather than face the committee in person.

The hearings resumed on August 7. Texas oil operator C. R.
Starnes appeared to testify that Standard had blocked him at every
turn in his efforts to produce synthetic rubber after Pearl Harbor.
Farish fired off another telegram to Bone, saying he was at a loss
to understand why Bone permitted his committee to be used as a
sounding board for “reckless, unsupported accusations.” He
charged Starnes with uttering “glaring falsehoods and misrepresen¬
tations,” and he flatly denied that he had restricted Starnes in any
way. Flying in the face of Starnes’s evidence, he said that “like all
Americans, who want to get on with this war, we have hesitated
to contribute in any way to prolonged public controversy and
name-calling. But the abuses of democratic procedures which oc¬
curred at yesterday’s hearing must be promptly and openly branded
for what they are, or we shall be in danger of losing the very things
this nation is fighting for.” He went on:

TRADING WITH THE ENEMY

The most slanderous statements of Mr. Starnes were tom from
the press release, and these mutilated copies were actually dis¬
tributed to the press in your committee room by your own com¬
mittee counsel. Your counsel can hardly plead that he was un¬
aware of the wild and scurrilous nature of the statements the
witness was going to make. The circumstances of the witness’s
appearance are peculiar. Even though you personally stated
that he had appeared on his own initiative, it is a singular coin¬
cidence that the testimony of this man was presented on the
identical mimeograph set-up as had been the testimony of pre¬
vious witnesses presented under the committee’s sponsorship.

These fulminations sat ill with Bone and with Roosevelt’s special
rubber committee headed by the famous Bernard Baruch, which
was holding meetings on park benches in Lafayette Square feeding
pigeons while it discussed the rubber crisis. Hatless and in shirt¬
sleeves in the heat, the Baruch committee wrangled desperately in
an effort to overcome the rubber shortage.

On August 12, Richard J. Dearborn of the Rubber Reserve Co.,
a federal agency, angrily denied Starnes’s charges. However, since
he was affiliated with Standard and with the Texas Company, his
denials could scarcely be said to be objective. John R. Jacobs reap¬
peared in an Army private’s uniform (he had been inducted the day
before) to bring up yet another disagreeable matter: Standard had
also in league with Farben restricted production of methanol, a
wood alcohol that was sometimes used as motor fuel.

Finally, on August 20, the various complications were ironed out
and Farish and Howard turned up before the committee. Howard
argued that Standard was aiding the war effort with oils, synthetics,
and other products now used in fighting planes, tanks, cannon, and
ships. He added that so far as Standard had learned through exami¬
nations of oils, fuels, and rubber taken from Nazi planes that had
been shot down, Germany had “not made extensive use” of the ex¬
change information. He did not explain how he had had access to
planes that had been shot down or how he had been able to make
such determinations from mangled or exploded fuselages.

Creekmore Fath, committee counsel, prodded Farish fiercely
about supplying aviation gasoline to the Nazi airlines in Brazil. He
snarled, “With the Lend-Lease program in action, were you follow-

THE SECRETS OF STANDARD OIL

ing the United States or the Almighty dollar in supplying gasoline
to the Lati Line?”

“I was following the Almighty State Department,” Farish retort¬
ed. “Do you question the motives of the State Department?”

Clashes between Fath, Farish, and Howard were frequent. Farish
was subjected to a grueling cross-examination in which Fath fre¬
quently accused him of lying. Bone snapped at Farish, “Are you
familiar with court procedure in which the plaintiff is heard first?”

Farish snapped back, “Do you mean to compare this inquiry to
a court proceeding?”

Bone added, “Standard Oil may be a large outfit but it is not going
to misinform the American people while I remain alive. I’m fed up
with outfits like yours intimating that Congress is trying to ride
them. God knows we’re not. No one is big enough to ride your out¬
fit; you’re the biggest corporation in the world.”

The effect of the inquiries on the Teagle and Farish families was
ultimately shattering. Farish’s two sons were in the Army Air Force
and must have been told often that Standard was fueling the planes
that they were combatting. Mrs. Teagle and Mrs. Farish had to cope
with the women’s clubs. As for stockholders’ meetings, they were
uncomfortable to say the least. Sales dropped and customers were
angered. In desperation Farish’s Big Board hired a top-flight public
relations consultant, Earl Newsom, to improve the company’s dam¬
aged image. John D. Rockefeller questioned Teagle and Farish on
the matters, obviously trying to avoid direct entanglement by seem¬
ing not to know the details of the German transactions. Press con¬
ferences were held in which Farish made glowing announcements
of the help that was being given the war effort. All of this failed
to heal the trauma caused by the severe ordeal in Washington. Far¬
ish literally died in all except the physical sense during the Bone
committee hearings. Almost equally shattered, Teagle seldom at¬
tended a board meeting again. He was so deeply wounded that he
would sleep for long hours and even showed a diminished interest
in hunting. The corridors of Rockefeller Plaza seldom heard his
heavy tread. Whatever he might pretend, Truman and Bone and
Thurman Arnold had jointly destroyed him.

On November 29, Farish, after spending Thanksgiving with his
family in New York, drove up to his hunting lodge, Dietrich Farms,
near Millbrook, New York, He spent the day walking through the

TRADING WITH THE ENEMY

golden woods surrounding the farm. Those who saw him noticed
that his brows were knitted in worry and that he looked pale.
Shortly after two o’clock that night, he felt very ill and a doctor
came to the house. At two thirty the following morning he called
out to his wife in an adjoining room that he had a severe pain in
his arm. A few minutes later he was dead of a heart attack. The
funeral took place at St. James Episcopal Church in New York on
Monday. Another service was held in Houston, where he was bur¬
ied.

Among the pallbearers were Teagle and the new chairman, Ralph
W. Gallagher. Others accompanying the coffin were General Mo¬
tors’ Alfred P. Sloan and the National City Bank’s president, Wil¬
liam G. Brady, Jr. Frank Howard was also in attendance. Harold
Ickes, whose diaries daily excoriated the Standard-Nazi connection,
felt compelled to deliver a hypocritical tribute for the occasion. In¬
spired more by propriety than honesty, the Old Curmudgeon lied:

I feel a very real sense of loss in the death of Mr. Farish. He
was a member, from the beginning, of our petroleum industry
committees and of the petroleum industry War Council. As
such he gave the fullest measure of sincere, able and patriotic
service to the manifold program which has been necessary to
mobilize oil, first for national defense and then for war. He did
so even when the taking of these steps called for a disregard
of normal competitive consideration. His place in the petro¬
leum war program will not be easily filled.

Meanwhile, on August 8, 1942, Standard was still busy. The com¬
pany’s West India Oil Company had shipped to the Nazi-associated
Cia Argentinia Comercial de Pesqueria in Buenos Aires on Trea¬
sury licenses. The U.S. Embassy in Argentina and the State Depart¬
ment authorized the transaction, along with members of the Petro¬
leum Board in Washington, who were also receiving a salary from
Standard.

In August 24, John J. Muccio, First Secretary of the U.S. Em¬
bassy in Panama, wrote a letter to Cordell Hull headed “Suspicious
correspondence—possible Axis control of fuel patent.” The district
postal censor had intercepted a letter from Miguel Braun, a Costa
Rican inventor, to Frank Howard and H. M. McLarin of Standard,

THE SECRETS OF STANDARD OIL

offering for sale a newly invented fuel known as Braunite that Braun
had developed. Braun was secretary and treasurer of Chemnyco,
I.G. Farben’s blacklisted New York subsidiary. The responding let¬
ter from Howard expressed interest in purchasing the patent and
soon after proceeded to negotiate for it.

On August 28, a commercial attache staff member in Argentina
permitted a Standard subsidiary to sell to another Farben subsidiary
of Buenos Aires despite the fact that the Argentine subsidiary was
blacklisted.

In the fall of 1942 it became clear that Germany was already in
desperate need of oil. Because of severe weather, shipment of barges
and tank cars was drastically restricted. In Africa, General Bernard
Montgomery had smashed the Germans and Italians at El Alamein.
The Russians had succeeded in their offensive against the Nazi ar¬
mies.

Switzerland proved more and more valuable as a neutral country.
On the surface leaning in the direction of the Allies, that country
was in fact in a permanent state of equivocation, exchanging raw
materials in Germany for precision instruments and tools. Germany
used Switzerland as a conduit for oil into France, which by
mid-November was completely in German hands. It behooved all
loyal American companies to do everything in their power to stop
the flow of petroleum from Rumania and Hungary through Switzer¬
land for the trucks and armored cars and tanks. But the crumbling
regime of William Farish had no such consideration for patriotism,
any more than Edsel Ford had when he approved the supply of
trucks for that same enemy.

In Switzerland the headquarters staff of Standard Oil was in con¬
stant touch with Rockefeller Plaza. It was not chartered to separate
itself independently since it was in neutral territory. At the begin¬
ning of November 1942, Henry Henggler and David Duvoisin, the
Standard bosses in Berne, paid an urgent visit to Leland Harrison
and Daniel Reagan, respectively minister and commercial attache
of the United States. They asked permission to continue shipping
Nazi oil from Rumania, from the oil fields that Standard had sold
(or leased) to the Nazis. The oil was to be carried by tank car
through Switzerland for use by, among others, the German and
Hungarian embassies.

Harrison and Reagan had been given a clear mandate by the State

TRADING WITH THE ENEMY

Department on July 10, allowing them to license transactions be¬
tween American concerns and enemy nationals based on the origi¬
nal Executive Order 8389 permitting such transactions. The proce¬
dure was that local members of the diplomatic corps had to apply
to both Dean Acheson and Morgenthau for the issuing of such li¬
censes. The meeting between Henggler and Duvoisin of Swiss Stan¬
dard and Harrison and Reagan was extremely cordial. While Harri¬
son and Reagan promised to take the matter up in Washington, they
suggested that Henggler and Duvoisin should drop in and see the
Swiss political department to see what the local government’s atti¬
tude might be. The two Standard men went over to the government
offices, where they received a characteristically Swiss reply. The of¬
ficials reminded their visitors that “We shall of course, gentlemen,
have to take into consideration our local laws. Article 273 of our
Penal Code provides that anyone who sells to an alien with whom
he is at war can be sentenced in this country to imprisonment.” The
officials told Henggler and Duvoisin that they would proceed as fol¬
lows. The Standard men must agree not to reveal the names of the
enemy companies to which they would be supplying products.
Thus, Switzerland would be neatly let off the hook.

Daniel Reagan wrote to Acheson on November 4, urging him to
agree to the arrangement for the oil shipment. He said that since
the Swiss would not authorize the arrangements that instructions
for the shipments should come directly from New York. Reagan
wrote:

Standard wants permission to store and transport in Switzer¬
land gasoline and fuel oils imported for the use of the Nazi and
Hungarian Legations. Standard will unload at the Swiss rail¬
way station from railroads controlled by the Axis. American
and British oil companies are dependent upon the enemy for
petroleum supplies imported by the Swiss syndicate, Petrola.
To irritate the enemy by ordering Standard to discontinue the
service performed for enemy legations might give the enemy
a pretext for refusing to permit oil of enemy origin to be distrib¬
uted by American companies. * The U.S. Legation is heated by
coal of enemy origin and the legation’s automobiles are pro-

Author’s italics.

THE SECRETS OF STANDARD OIL

pelled by enemy gasoline. If Standard discontinues storing and
transporting oil and gasoline for enemy legations, the latter can
undoubtedly have this service performed by a non-American
company. To compel the American concern to cease these
transactions with enemy legations .. , might result in reprisals
against Standard and other American and British oil compa¬
nies. The legation accordingly recommends that Standard be
licensed to continue this operation.

Reagan also asked for Standard to be given permission to pay a
Nazi employee of Standard a monthly payment through a Ger-
man-Swiss clearing account. Reagan went on to discuss Standard’s
ownership of the Rhone barge Esso 4. which was presently com¬
mandeered by Germany. DAPG, the German Standard subsidiary,
had continued after Pearl Harbor to pay rental to U.S. Standard
for the barge. Also, the Danube barges Pico I and Pico II were sup¬
plying I.G. Farben, Krupp, and other Nazi industrial powers, and
DAPG was siphoning payments through to New York. Reagan
asked if the payments could continue.

The matter of Jean Inglessi came up. He was an official of the
Standard Oil office in Paris under the Nazi occupation. He was also
on Swiss Standard’s board in Lausanne. Reagan urged that Inglessi
be kept on.

Furthermore, Reagan urged State to approve the matter of Stan¬
dard railway tank cars carrying oil through Occupied France to
Switzerland. Several of these had been commandeered by the Ger¬
man army. The cars were covered by Swiss war risk insurance. Stan¬
dard wanted permission to assist the Swiss authorities to obtain re¬
imbursement from the Nazis because the tank cars had been
bombed by the British. On December 11, Minister Leland Harrison
advised Cordell Hull and the others that the British Legation in
Switzerland concurred with the recommended arrangements.

On December 26, 1941, John G. Winant, U.S. Embassador to
Britain, discussed the matter with the Chancellor of the Exchequer,
Sir Kingsley Wood. Instead of stopping these transactions at once,
Winant and Wood decided that it would eventually be “preferable”
if a Swiss company transported oil for the enemy legations but that
there was no objection to the procedure continuing and that “It is
best not to incur any risk of [offending the enemy] by raising this

TRADING WITH THE ENEMY

issue.” The note continued, ‘‘Embassy concurs with British view
that on balance there is no reason for taking action which would
at most be only minor irritant to Germans and which might compli¬
cate an already difficult situation or lead to unfortunate conse¬
quences as regards to future operations of American and British oil
companies.”

The embassy and the British agreed that the Nazi employee could
be paid each month, that payment for the barges should be licensed,
and that Jean Inglessi should be allowed to continue in office pro¬
vided he did not live in Occupied France. Also, the license should
be given to permit Standard to communicate with France, via the
Chase Bank in Paris, to recover the tank cars or obtain war risk
indemnity from the Germans, again through the Chase.

On December 29, Winanf s office—he was en route to Washing¬
ton-advised that all licenses should be granted as requested.

The matter was handed over to Morgenthau, who under severe
pressure from State was compelled to authorize almost all of the
arrangements but deferred decision on the business of supplying the
enemy consulates with oil and allowing Standard to ship that oil.
However, he permitted the shipments to continue until the Swiss
company could efficiently take over.

On January 28, 1943, Harrison protested the decision on ship¬
ment by repeating that “to provoke enemy unnecessarily [was]
highly undesirable.” But he did promise efforts would be made to
have the Swiss company transfer the services. Inglessi must surely
be allowed to stay in office even though, Harrison revealed, he was
working for Standard in Occupied France.

The result of all this was that Standard continued to fuel the
enemy, and the enemy fueled the U.S. Legation and its automobiles,
until at least mid-1943.

Other transactions continued. On March 5, 1943, a license was
granted permitting Standard in Brazil to pay an enemy corporation
for special apparatus. On March 22 an enemy agent on the blacklist
was licensed to receive $3,668 by Standard for legal services in Rio.
The licensing went on and on. On April 21, 1943, Duvoisin cabled
Zurich confirming the shipment of 16.7 tons of fuel to the Axis. The
message was intercepted by censorship and sent most urgently to
all branches of intelligence but nothing was done about it.

On June 1, 1943, I. F. Stone of The Nation (who knew nothing

THE SECRETS OF STANDARD OIL

of the aforementioned secret correspondences which were classified
up to 1981) attended the Standard stockholders’ luncheon at the
Patrons of Husbandry Hall in Flemington, New Jersey. He reported
that in an early American setting, Ralph W. Gallagher, successor
to Walter Teagle as chairman, sought to reply to the angry stock¬
holders who questioned the I.G. Farben association. Gallagher
pulled two rabbits out of a hat: two meek young men who had sur¬
vived torpedoed Standard Oil tankers that had been sunk (by some
miscalculation). One Standard supporter asked the crowd how any¬
one could question the patriotism of a company that had given the
lives of three hundred of its men in the war against the submarine.
“At this point,” Stone wrote, “your correspondent was taken ill.”

James W. Gerard, former ambassador to Germany, spoke in sup¬
port of the company, saying that he had no knowledge of any such
American-German relations. Only a handful of those present knew
that he had left Germany and his post there a decade before I.G.
Farben was formed.

As a grant finale to a meeting notable for its black humor, Ralph
W. Gallagher said unblushingly, “We never had any cartel arrange¬
ment with I.G. Farben.” At that moment The Nation's reliable cor¬
respondent again felt unwell.

Only eight days later, in a secret document dated June 9, 1943,
C. F. Savourin of Standard Oil in Venezuela was authorized to con¬
tinue trading in oil with Gustav Zingg’s* company and three other
Proclaimed List corporations to the tune of a total of 13,000 kilos
' a month.

On June 15, Joseph Flack, American charge d’affaires in Caracas,
sent to Hull an astonishing list of “sales made to Proclaimed List
nations”! Such monthly lists were sent to Washington throughout
the entire war.

State Department memoranda in August 1943 show trading was
permitted between a Standard subsidiary and five Proclaimed List
nationals in Caracas, Venezuela, that were shipping oil to Aruba
for use in Spain.

None of these transactions was ever made public. The details of
them remained buried in classified files for over forty years. Howev¬
er, it proved impossible for Ralph Gallagher and Walter Teagle,

Nelson Rockefeller’s lessor in Caracas.

TRADING WITH THE ENEMY

who remained active behind the scenes, to conceal the fact that ship¬
ments of oil continued to fascist Spain throughout World War II,
paid for by Franco funds that had been unblocked by the Federal
Reserve Bank while Loyalist funds were sent to Nazi Germany from
the vaults of the Bank of England, the Bank of France, and the Bank
for International Settlements.

The shipments to Spain indirectly assisted the Axis through Span¬
ish transferences to Hamburg. At the same time, there were desper¬
ate shortages in the United States, long lines at the gas stations, and
even petroleum rationing. While American civilians and the armed
services suffered alike from restrictions, more gasoline went to Spain
than it did to domestic customers.

The whistle was blown by U.S. Ambassador Carlton J. H. Hayes
in Madrid on February 26, 1943, who made a statement that “oil
products available in this country of Spain are considerably higher
than the present per capita distribution to the people of the Atlantic
Seaboard of the United States.” Asked by The New York Times how
this could be explained, a spokesman for Cordell Hull declared
blandly that the oil came from the Caribbean and not from the
United States and was hauled by Spanish tankers. The evasiveness
of the response was typical. The spokesman also neglected to men¬
tion that shipments were going to Vichy and to French West Indian
possessions under collaborative influence.

Hayes revealed that the gasoline and petroleum products equaled
the full capacity of the Spanish tanker fleet. He neglected to add
that much of that fleet proceeded regularly to Germany and helped
to fuel Nazis, including their embassies and consulates and military
installations, tanks and armored cars as well as Spanish troop trans¬
ports on the Russian front, fighting against the Soviet Union, which
was America’s ally.

In addition to oil, 25,000 tons of sulphate of ammonia were
shipped to Spain in 1943 along with 10,000 tons of cotton, despite
American shortages in both commodities.

The economist Henry Waldman wrote to The New York Times
on February 26, stating it accurately as it was: “Here we are, a na¬
tion actually assisting an enemy in time of war, and not only that,
but stating through our Ambassador, that we stand ready to con¬
tinue and extend such help . . . Spain is [an enemy] and yet we aid
her.”

THE SECRETS OF STANDARD OIL

Needled by this and other criticisms, Sumner Welles announced
on March 11 that “adequate guarantees have been furnished to sat¬
isfy the British and United States governments that none of these
quantities of oil will reach Germany or German territory.” He evi¬
dently chose not to reveal that such guarantees from the mouth of
General Franco were useless.

The flow of oil continued. On January 22, 1944, Dean Acheson
said that “Oil is allowed to go to Spain as part of the bargaining
done with neutral countries to keep them from supplying the enemy
with what he wants from them.” This statement was made on an
NBC broadcast entitled “The State Department Speaks.” He was
telling only half the story.

The fact that this was so was revealed within less than a week.
Despite opposition by Acheson, Harold Ickes overruled everybody
and went to see Roosevelt. The result was that the United States
suspended oil shipments to Spain. Ickes had accumulated a dossier
from his special staff of investigators. The dossier showed that in
fact oil was going to Germany, that German agents were operating
freely on Spanish territory, and that Franco had just released 400
million pesetas of credit to Germany. This would insure the Ger¬
mans a flow of all the oil it needed, plus unlimited supplies of wol¬
fram, the ore from which tungsten, a hard substance capable of pen¬
etrating steel, was made.

Of course, all of this was known to the United States State De¬
partment long before Ickes took drastic action. Nevertheless, noth¬
ing whatsoever was done about it. For a brief period the truth
emerged about Spain. Spanish ships were searched at sea, showing
that oil, platinum, industrial diamonds, and liver extract, from
which the Germans made a tonic for fliers, submarine crews, and
even shock troops, were coming from Argentina and the Caribbean
on Spanish vessels, admitted through the British blockade by Amer¬
ican licenses.

On January 28, 1944, the British government cut off oil, gasoline,
and other petroleum products to Spain. Franco protested violently.
Dean Acheson remained sensibly silent.

It was a brief period of sanity. On May 2, 1944, after only three
and a half months of suspension, the oil lobby won a fight to restore
shipments and to allow limited wolfram exports to Germany as
well. In order to secure this important move, Cordell Hull arranged

TRADING WITH THE ENEMY

for General Franco to expel Nazi agents from Spain, Tangier, and
the Spanish Zone of North Africa. Although Franco more or less
followed these polite requests, he continued to harbor large numbers
of Nazis sheltering under diplomatic immunity. There was never
any question of breaking off diplomatic relations with Germany:
48,000 tons a month of American oil and 1,100 tons of wolfram
began to flow back to the Nazis.

A certain grim amusement could be extracted from an interview
with R. T. Haslam, vice-president of Standard, on September 19,
1944, in The New York Times. Haslam said that “Germany has suc¬
ceeded in producing a fine gasoline, the equivalent of our own, but
in limited quantities.” The remark passed almost unnoticed.

On July 13, 1944, Ralph W. Gallagher of Jersey Standard sued
the U.S. government for having seized the synthetic rubber patents
handed over to Frank Howard at The Hague. I.G. Farben lawyer
August von Knieriem flew in from Germany to testify against Stan¬
dard. Gallagher’s face was a picture when he saw Knieriem enter
the courtroom. He knew Knieriem would reveal much of the truth
of Standard’s dealings with the Nazis.

On November 7, 1945, Judge Charles E. Wyzanski gave his ver¬
dict. He decided that the government had been entitled to seize the
patents. Gallagher appealed. On September 22, 1947, Judge Charles
Clark delivered the final word on the subject. He said, “Standard
Oil can be considered an enemy national in view of its relationships
with I.G. Farben after the United States and Germany had become
active enemies.” The appeal was denied.

The Mexican Connection

Even the supposed enemies of The Fraternity were connected to it
by almost invisible threads. One of Jersey Standard’s most powerful
rivals in the field of petroleum supplies to Germany, William
Rhodes Davis’s Davis Oil Company, was connected to Goring and
Himmler. Davis was linked to Hermann Schmitz and I.G. Farben
through the Americans Werner and Karl von Clemm, New York
diamond merchants (who were first cousins to Nazi Foreign Minis¬
ter Joachim von Ribbentrop by marriage), and through the National
City Bank.

The von Clemms were fanatical devotees of Germany, even
though both had become American residents in 1932. They used
a device typical in Nazi circles: a device copied, ironically, from the
Rothschilds. One brother stayed in Berlin, the other remained in
New York. They were connected to the Schroder banks through
interlocking directorships, and on the board of a company that
helped finance General Motors in Germany along with I.G. Farben.

In 1931 they financed the Gestapo with funds supplementing
those supplied by Schroder’s Stein Bank. Yet another Fraternity
link was their involvement with the First National Bank of Boston,
an associate of the Bank for International Settlements. They con¬
ceived the idea of unblocking First National’s blocked German
marks to build a vast oil refinery for Goring’s air force and for Far¬
ben and Eurotank near Hamburg, with Karl von Clemm in charge.
This oil refinery would bypass the terms of the Versailles Conven¬
tion and supply Goring’s so-called Black Luftwaffe, which was se¬
cretly being prepared for world conquest.

In order to secure the oil for the refinery, the von Clemm brothers
had to find an American who would aid and abet them. The choice
was easy. From 1926 to 1932, Werner von Clemm had financially
sustained a largely unsuccessful oil prospector and confidence trick¬
ster named William Rhodes Davis.

Davis was on the face of it unprepossessing. He was short, not

TRADING WITH THE ENEMY

much over five feet, with a solid-gold left front molar and a badly
bowed left leg that contained a silver plate put there after he was
injured in a train wreck in 1918. His head was too large for his body,
and his face sported a broken nose. Yet despite his lack of good
looks he had the one indispensable quality needed for success. He
had the gift of gab. He was capable of talking anyone into the
ground. He spoke in superlatives. He never took no for an answer,
and he would shaft anyone when the chips were down.

Davis was born in Montgomery, Alabama, in 1889. Poorly edu¬
cated, he left school at sixteen and jumped a freight car. A kindly
porter gave him a job as candy butcher, selling chocolate and ice
cream from a tray. Railroad crazy, he graduated to brakeman, fire¬
man, and engineer in the Southwestern states until the collision put
him out of commission. Emerging from the hospital with a gimpy
leg, he used his plight to his own advantage by working as a come¬
dian on the Keith vaudeville circuit, making audiences laugh as he
wiggled his distorted member in a dance. When his popularity ran
out, he shipped off on tramp steamers as stoker, fireman, and engi¬
neer.

Back in the United States, he dabbled in the oil business but con¬
sistently went broke. He was under frequent investigation for a vari¬
ety of swindles. People were fascinated, even hypnotized, by him;
but disillusionment would always set in, followed by the inevitable
lawsuit. He sold dry wells, manipulated stocks, and set up and col¬
lapsed small companies, carrying the shareholders with him.

In 1926 he was penniless. The von Clemm twins stepped into the
picture in 1933. Their support of him saved him from ruin and im¬
prisonment. As a result of this he became deeply committed to Na¬
zism. He was fascinated by the opulence of a Germany heavily fi¬
nanced by American bank loans, the handsome, healthy men in
black uniforms, the pretty blond women. It all seemed a far cry from
the breadlines and pinched faces of America in the Depression.

After the deal with the German government over Eurotank,
Davis saw the way to make his fortune at last. He owned a few wells
through the von Clemms’ good graces. With German money he
could certainly start pumping.

He traveled to Berlin in 1933. He had to have the personal ap¬
proval of Hitler before he could go ahead. He arrived at the Adlon
Hotel, where Karl von Clemm arranged a reception for him to meet

THE MEXICAN CONNECTION

Hermann Schmitz of Farben, Kurt von Schroder, and other Ger¬
man members of The Fraternity. He was welcome at once when
he gave the group the Nazi salute as he entered the room.

Next morning, two Gestapo officers delegated by Himmler ar¬
rived at the door of his suite. They carried with them a letter from
the Fiihrer. The former brakeman and candy butcher was over¬
whelmed. He could not believe he had received so signal an honor.
The letter asked him to meet with Finance Minister Hjalmar
Schacht at the Reichsbank. When he arrived, Schacht seemed cold
and uninterested and brushed the whole matter aside. Schacht al¬
ready had deals going with Walter Teagle and Sir Henri Deterding
of Shell. What did he want with this small fry?

Furious, Davis returned to the Adlon empty-handed. He wrote
to Hitler, insisting upon better treatment. Hitler replied immedi¬
ately in person, asking him to return to the Reichsbank the follow¬
ing morning for another meeting.

Davis arrived in the boardroom at 11 a.m. As FBI records show,
Schacht smiled faintly in a comer, obviously in no mood to talk.
But a door flew open and thirty directors of the bank appeared, to
greet Davis with warm handshakes. Hitler strode in. Everyone
jumped to attention and gave the Nazi salute. Hitler said, “Gentle¬
men, I have reviewed Mr. Davis’s proposition and it sounds feasible.
I want the bank to finance it.” Then he walked out.

It was clear to Davis that the directors of I.G. Farben, along with
Kurt von Schroder, had exercised influence over the Fiihrer.

Davis traveled to England, where he resumed an earlier business
relationship with Lord Inverforth’s oil company. He obtained major
concessions in Ireland and Mexico. He traded Mexican oil for Ger¬
man machinery when it proved impossible to export marks. Euro-
tank was built. By 1935, Davis was shipping thousands of barrels
of oil a week from his wells in Texas and eastern Mexico.

Davis knew Senator Joseph F. Guffey of Pennsylvania, whose
friend Pittsburgh oilman Walter A. Jones had major contacts in
Washington. Through Guffey and Jones, Davis met with John L.
Lewis, the labor leader of the CIO. Davis worked hard on Lewis,
convincing him that national socialism was preferable to democracy
and that the German worker far exceeded in health, good humor
and muscular prowess the American equivalent. In 1936, Davis
tried to influence Roosevelt by pouring money into the election cam-

TRADING WITH THE ENEMY

paign. From then on he was always able to telephone the Oval Of¬
fice.

In 1937 he saw a major opportunity in Mexico. He was convinced
President Lazaro Cardenas would nationalize the oil fields. He fore¬
saw a way to comer all the oil in Mexico. In February 1938 he
started bribing high-ranking officials in the Mexican government.
He made a close friend of Nazi Vice-Consul Gerard Meier in Cuer¬
navaca, who was allegedly encouraging Cardenas to invade and re¬
possess California, Texas, Arizona, and New Mexico.

Davis obtained the Mexican government’s cooperation. He was
promised all the oil in Mexico when Cardenas expropriated it on
March 18, 1938. Cardenas kept his promise. On April 18, John L.
Lewis telephoned Cardenas’s right-hand man Alejandro Carrillo.
Lewis told Carrillo that Davis would be making a deal with Ger¬
many and Italy immediately and that these two countries were the
only two with which it would be safe for Mexico to deal.

Why did America’s most famous labor leader support the arming
of the Nazi war machine? Because Lewis had major territorial ambi¬
tions himself. He dreamed of a Pan-American federation of labor
of which he would be the unchallenged leader. Through Davis, and
through Cardenas, he would be able to consolidate the unions north
and south of the border. In this he had the total collusion of Vin¬
cente Lombardo Toledano, head of the Mexican labor force.

By June 1938, Davis’s first tanker was steaming to Germany with
thousands of tons of Mexican oil. But by 1939 he was already run¬
ning into trouble. On May 31 his chief geologist, Nazi Otto Probst,
was found murdered in his hotel room in Mexico City. Probst had
been strangled by a clothesline that was tied to the head of his bed.
The German Embassy intervened and prevented an autopsy. FBI
investigators determined Probst had been poisoned. It turned out
he had bribed government officials and stimulated action against
communists. It was almost certainly a communist killing.

Communist cells infiltrated Davis’s growing oil empire. He used
strikebreakers to vanquish the opposition and shipped millions of
barrels of oil until after World War II broke out in Europe.

Meanwhile, the von Clemm brothers profited enormously from
his success. Goring gave them the German franchise in hops, put¬
ting them in virtual control of the beer business.

Along with Davis, they became multimillionaires. In one of his

THE MEXICAN CONNECTION

frequent visits to Germany, Davis became close to a bespectacled,
bulbous-foreheaded youth named Dr. Joachim G. A, Hertslet.
Hertslet worked with Helmuth Wohlthat on Goring’s economic
staff and he also worked on Emil Puhl’s staff with Hans-Joachim
Caesar. In a series of urgent meetings with Goring, Admiral Erich
Raeder, and various army chiefs, these young economists arranged
for Davis to fuel the German navy, while Standard Oil fueled the
air force. Davis and Joachim Hertslet arranged a German credit of
$50 million to Cardenas to be used for the reconstruction of the bro¬
ken-down national railroad system, the building of irrigation and
hydroelectric power projects, and the setting up of new oil-field
equipment and construction. Hertslet opened the German Im¬
port-Export Corporation in Mexico City, which was to aid Mexico
in stabilizing its currency. It was Goring’s plan to render Mexico
a debtor republic that could be relied upon to be an ally in time
of war.

In meetings in Mexico City at the end of August 1939, Davis told
Hertslet of his concern about what might happen to his oil ship¬
ments ifGermany was involved in war. The papers were full of fore¬
bodings. Davis saw his newfound empire crumbling. Whatever hap¬
pened, he had to secure permanent peace. He cabled Berlin on
September 1, 1939, asking Goring if he could see Roosevelt to stave
off the conflict. Needless to say, Goring’s reply was enthusiastic.
That same day he had sent Electrolux’s Axel Wenner-Gren on a
similar mission to Roosevelt.

Hitler’s attack on Poland and Britain’s subsequent declaration
of war threw Davis into panic. He had his colleague, the beautiful
secretary Ema Wehrle, help him prepare a secret code, to be ap¬
proved by Himipler, which would allow him to keep in touch with
Hitler and evade British censorship in Bermuda. The code desig¬
nated Ema as Chrysanthemum, Hitler as Heron, and surprisingly,
John L. Lewis as Dung. Roosevelt, Goring, and all other figures
had their code names.

Next, Davis rushed Hertslet to Berlin to insure Goring’s complete
support in the future. On September 5 he had an urgent conference
with Lewis, who called Roosevelt and insisted the President see the
anxious oilman.

Roosevelt dared not offend Lewis because of Lewis’s power over
the work force on the brink of the 1940 election. However, he was

TRADING WITH THE ENEMY

afraid of what he called “entry or plot”: J. Edgar Hoover and the
State Department’s Adolf A. Berle had handed him massive dos¬
siers showing Davis’s Nazi connections.

Like Ickes and Morgenthau, Berle was a fierce opponent of Nazi
Germany. Morgenthau and Ickes were very happy to have him deal
directly with the Davis matter. Busy fighting Standard Oil, they
needed his assistance badly. Berle worked against Dean Acheson,
whom he disliked intensely; the feeling was mutual. Berle was a
maverick in the State Department, a thin, fierce, driven man who
completely lacked the smooth gift of compromise normally required
in Department dealings. Roosevelt trusted him completely. Indeed,
he placed Berle over Hoover, preferring to have all of Hoover’s re¬
ports siphoned through Berle and analyzed by him before they
reached the desk of Major General Edwin M. (“Pa”) Watson, the
presidential secretary.

On September 13, Davis called Roosevelt for an appointment.
The moment he was off the phone, Roosevelt summoned Berle to
the Oval Office. He asked Berle to sit in on the meeting with Davis
scheduled for the following afternoon; he was to take minutes and
to give him his personal comments as soon as Davis left.

At two o’clock the following day Davis limped into the office with
all of his bantam cock’s outrageous arrogance. He paced about the
room, spouting his line of peace with Hitler and suggesting he
should go to see Goring to convey Roosevelt’s peace message. He
was irritated by Berle’s presence in the room. He asked Roosevelt
twice if Berle could leave. Roosevelt refused to accede to his request.
Davis shrugged and sat down.

While Roosevelt listened through a cloud of cigarette smoke
Davis unraveled a great deal of specious nonsense. Knowing Roose¬
velt had no time for Hitler, he tried to sell him Goring, promising
that Goring would soon take over the German government and say¬
ing that Hitler had been “moved away from the main Council.” He
asked the President’s authority to enter into peace talks with Goring
on the President’s behalf.

Roosevelt replied that he had often been approached to intervene
in the European conflict but he could only do so through official
channels. He pointed out that he had sent a message just before the
war suggesting peace talks but had not received an answer until the
war had begun, “which, of course, got no one anywhere.”

THE MEXICAN CONNECTION

Roosevelt did not authorize Davis to act on the American govern¬
ment’s behalf. Indeed, as soon as Davis left, he ordered Berle to con¬
tact J. Edgar Hoover and instruct the FBI chief to report directly
to Berle on Davis’s movements and contacts. On no account was
Hoover to report to the Attorney General Robert H. Jackson or
to Cordell Hull.

Davis left the meeting with Roosevelt in a state of drastic unease.
Hertslet cabled him on Goring’s instruction that he and Lewis must
influence Roosevelt to suppress any revision of the Neutrality Act.
In his cable of September 18 he reminded Davis, who scarcely
needed reminding, “selling to belligerent nations means destroying
cargo boats.”

Davis, afraid of falling out of favor with Goring, cabled Berlin
the next day that the President wanted him to negotiate the peace.
He pretended that Roosevelt had agreed Germany should keep
Danzig, the Polish Corridor, Czechoslovakia, all former provinces
ceded to Poland by the Versailles Treaty, and all African and other
colonies that Germany had had before 1918. He asserted that Roo¬
sevelt had appointed him ambassador without portfolio. He left for
Lisbon and Rome on September 20. His plane was forced down by
storms in Bermuda. British Intelligence men came to the airport
and questioned him closely. He refused to answer them and pro¬
ceeded to Lisbon.

In Rome, Himmler sent several Gestapo men to meet Davis’s
plane. The oilman had a quick meeting with Mussolini, who proved
welcoming. Accompanied by the SS men, he was given a special ae¬
rial tour of the German and Polish fronts.

Goring received him at the Air Ministry in Berlin on October
1, 1939. Among those present were Hertslet and Wohlthat. Goring
opened the conference by expressing his admiration for Davis's ef¬
forts in providing petroleum to Germany for almost seven years
through Eurotank. He asked for Roosevelt’s sentiments and Davis
insisted that Roosevelt was pro-German. Goring was understand¬
ably surprised. He said that he expected Davis to help secure perma¬
nent peace at the conference table, with Hitler and Roosevelt presid¬
ing.

J. Edgar Hoover and military intelligence determined that Herts¬
let would be returning with Davis to the United States. When Davis
and Hertslet arrived in Lisbon on their way home, the local consul

TRADING WITH THE ENEMY

refused Hertslet a visa. Davis made a tremendous fuss, citing his
“friendship” with Roosevelt and shouting that Hertslet was “a di¬
rector of his European company.” The consul cabled Berle in Wash¬
ington, asking him whether he should shut his eyes to the fact that
Hertslet was a high-ranking figure in the Nazi government.

In Washington, Berle had an urgent meeting with Assistant Sec¬
retary of State George S. Messersmith. They agreed Hertslet was
dangerous. They cabled the consul in Lisbon to refuse Hertslet the
visa. Hertslet returned to Berlin to obtain a diplomatic passport.

Back in Washington, Davis checked into the Mayflower Hotel.
FBI men had difficulty in bugging his conversations and move¬
ments. A post office convention filled the hotel and the G-men were
unable to find a single room from which to operate. They had to
use corners, closets, fire escapes, and even the roof as bases of their
operations. It was only by engaging waiters and maids to .help them
that they discovered the import of meetings between Davis and his
reliable secretary. These indicated commitment to the Nazis
whether America came into the war or not—at least on Davis’s side.

Davis tried to arrange another meeting with Roosevelt. While he
waited for a decision, he changed his tankers to Panamanian regis¬
try to slip them through the British blockade to Lisbon, Hamburg,
and other ports of Europe. He kept up a constant flow of petroleum
and vital materials to Japan, again using Panamanian registry rather
than Japanese tankers because British Intelligence was boarding
Japanese ships at sea and arresting their German crews. Davis en¬
tered into collaboration with a former U-boat captain who was one
of the harbor staff of Brownsville, Texas, and could aid him in his
blockade running.

Meanwhile, the von Clemm brothers were running into trouble.
Morgenthau’s Treasury agents were in Berlin, dodging the Gestapo
to investigate the Davis-von Clemm deals through the Hardy Bank.
Karl von Clemm cabled Davis frantically on October 11, 1940, that
he saw “execution” coming, and he reminded Davis of his six and
a half years of protection of the oilman. What could Davis do? Davis
arranged with Goring for von Clemm to be transferred to Rome.
Von Clemm and his brother diversified their company into diamond
smuggling.

Following the occupation of Belgium and the Netherlands, the
banks rushed their large holdings of diamonds into special vaults.

THE MEXICAN CONNECTION

But they were compelled to reveal the vaults' whereabouts. The von
Clemms made a deal with the German government to obtain a cor¬
ner in diamonds, importing them to North America to sell for des¬
perately needed dollars with which to finance espionage rings and
obtain industrial diamonds. Since the war was going on, these ship¬
ments were in direct contravention of the existing laws. So the von
Clemms set up a complicated routing for their transactions.

The diamonds were shipped from Brussels and Amsterdam to
Rome. They were put aboard the Nazi-controlled L.A.T.I. airline
and flown via Lisbon and Dakar to Natal in Brazil and thence to
Rio. They came by diplomatic pouch from the German Embassy
to the German consulate in New York.

In 1940, with no satisfaction from Roosevelt, Davis turned vio¬
lently against the President and joined with the Nazis in a desire
to destroy him in the elections. John L. Lewis agreed with Davis
that Roosevelt must go or the entire oil deal with Hitler might be
stopped.

Davis talked with Goring and the result was that Goring actually
supplied $8 million to engineer the President's downfall. The Fra¬
ternity members decided to finance Burton K. Wheeler for accession
to the White House. The perfect choice of a Nazi faction, Wheeler
was ceaseless in his support of Hitler. He used his senatorial frank¬
ing privileges to distribute Nazi propaganda through the mail. He
opposed Lend-Lease, conscription, and aid to Britain in the form
of warships and munitions.

The $8 million arrived in Washington via L.A.T.I. airlines and
Pan American Airways. Davis spread the money through accounts
in six different banks. His first investment was $160,000 to buy forty
Pennsylvania delegates at the Chicago Democratic party conven¬
tion to insure the defeat of his old friend Senator Guffey, who was
threatening to expose The Fraternity. The forty Pennsylvania dele¬
gates would also vote against Roosevelt. The deal did not work.
Guffey won the nomination and so did Roosevelt. Wheeler lacked
the common touch and had no chance against the President.

John L. Lewis did his best. He guaranteed ten million votes for
Roosevelt's Republican opponent, Wendell Willkie. He gave a radio
speech on October 25, denouncing Roosevelt as a warmonger and
threatening to retire from the CIO if the President was reelected.
But Roosevelt remained in power. While leaving the public in no

TRADING WITH THE ENEMY

doubt of his attitude to Hitler, he promised the electorate that no
American boy would die on foreign soil. He thus united the isola¬
tionist factors and assured himself the election.

Davis overcame the setback by expanding his operation. He set
up U-boat refueling bases through the Caribbean and South Ameri¬
can coastlines. He split off Eurotank into an independent body
under Goring and Karl von Clemm, his profits indirectly siphoned
to him through the Bank for International Settlements via Lisbon
and Buenos Aires. But as America drew closer to war, the von
Clemm brothers grew more and more worried about their American
operation. They had to be prepared for the flow of diamonds and
oil to be stopped.

In May 1941, Karl von Clemm warned Werner in a cable encoded
aunt rate dying fast that Hitler was about to declare war on
the Soviet Union. When Hitler invaded Russia, Davis’s shipments
of oil via Vladivostok and the Trans-Siberian Railroad to Berlin
abruptly stopped. Hastily, he increased his Compania Veracruzana
deals with Japan, and arranged for $3 million in yen to be trans¬
ferred to him via the White Russian millionaire Serge Rubinstein
to buy foreign exchange and finance oil wells. He also became in¬
volved in business deals with Brazil and Argentina.

Davis gave financial support to the No Foreign Wars Committee.
This was financed also directly from Berlin. Meanwhile, the von
Clemm brothers financed the pro-Nazi America First movement.
With Verne Marshall, isolationist editor and supporter of Hitler,
Davis and Werner von Clemm became involved with Charles Lind¬
bergh and his “pacifist” campaigns against Roosevelt. On January
2, 1941, Senator Josh Lee, a Democrat from Oklahoma, charged
that the formation of the No Foreign Wars Committee with Davis’s
backing amounted to “the diabolically cunning betrayal of the
American people.” He added:

The record of this man Davis shows conclusively the great fi¬
nancial stake he has in a complete Nazi victory in the European
war. Much of the gasoline sending showers of fiery death into
the defenseless heart of London was sold to the German gov¬
ernment by this man Davis. ... He is still trying to promote
a phony peace through the White House to pull Nazi Germa¬
ny’s chestnuts out of the fire. . . . The No Foreign Wars Com-

THE MEXICAN CONNECTION

mittee is a timely object lesson in the technique of Nazi infiltra¬
tion.

The truth of Lee’s words could be seen in the fact that the com¬
mittee included Senator Rush D. Holt of Virginia, who was alleged
to be in the direct pay of the Nazi government.

On January 5, at a press conference in his offices on the
fifty-fourth floor of the RCA Building in Rockefeller Plaza, Davis
denied he was financing the committee. He said he would like to
appear before the Senate committee that had been formed to investi¬
gate his activities. The investigative committee was headed by Sena¬
tor Burton K. Wheeler!

In an attempt to bolster his case, Davis said he had not shipped
oil to Germany after war broke out, knew nothing about what was
happening at Eurotank (despite the fact that he had received a letter
from Karl von Clemm the day before), and stated he was a direct
descendant of the South African empire builder Cecil Rhodes and
of Jefferson Davis. The problem was that Cecil Rhodes had had no
children and that Jefferson Davis’s descendants had been disowning
the oilman for the past twenty years.

By May, Senator Wheeler had “cleared" Davis of all connections
with the Nazi government. But this help from a fellow Fraternity
figure did not ease Davis’s increasing sense of fear that Roosevelt
would bring America into the war. On July 26 he appeared briefly
on radio to support Wheeler’s all-out attack on Lend-Lease. On Au¬
gust 1 he was in Houston when he was stricken with a fatal heart
attack in his hotel room.

In his authorized biography, A Man Called Intrepid, Sir William
Stevenson claims that Davis did not die from natural causes but was
murdered by representatives of British Intelligence. According to
the FBI files his demise was simply brought on by the terrible strain
of the preceding months as his empire fell apart and his Nazi con¬
nections began to cause some of his shareholders to run for the hills.

After his death his secretary, the glamorous Ema Wehrle, became
chairman of the giant corporation. Werner von Clemm became
vice-president. The board was made up of Fraternity aide U.S. Sec¬
retary of Commerce Jesse H. Jones, Harry D. Collier of California
Standard, and Hamilton Pell, partner of Leo T. Crowley in Stan-

TRADING WITH THE ENEMY

dard Gas and Electric. The Fraternity had come full circle once
more.

Throughout the early months of 1942, Morgenthau’s team built
a damning case against the von Clemm brothers. Meanwhile, they
hastily sold the Davis Oil Company to Fraternity brothers Serge
Rubinstein and Axel Wenner-Gren to insure its continued exis¬
tence.

Werner von Clemm went on living a life of luxury on his ill-gotten
gains. He became a pillar of society in the heart of the fox-hunting
country: at Syosset, Long Island. No one who enjoyed his company
suspected that this handsome member of the local social set was
on the brink of being arrested.

On September 26, 1942, a police car containing Treasury agents
rolled up at the door of the von Clemm house. The visitors rang
the doorbell. A maid came to the door. The elegant von Clemm was
waiting in the living room to receive the visitors. The agents apolo¬
gized for the inconvenience and politely placed handcuffs on Wer¬
ner’s delicate wrists.

The trial caused a great stir in Syosset. Werner lied and lied, try¬
ing to hide the details of the conspiracy. But it was useless. He was
sentenced to five years in prison—the only member of The Frater¬
nity to suffer such a sentence. There is a curious footnote to the
story. On October 15, 1942, the German government sent an official
message through the Swiss authorities to American minister Leland
Harrison in Berne. They asked for a full transcript of von Clemm’s
trial to be sent from Washington to Berlin. It was, of course, sup¬
plied.

At war’s end, O. John Rogge, Special Assistant to the Attorney
General, collected a mass of evidence in Germany to show the
Davis-Lewis connection. At a speech at Swarthmore College on Oc¬
tober 26, 1946, he told the story of the association. He also showed
other questionable connections, including the activities of Burton
K. Wheeler on behalf of the Nazi government. The result was that
Attorney General Tom Clark fired Rogge. When the author of this
book asked him in 1981 why he had been dismissed, the dying
Rogge replied succinctly. “Wheeler,” he said, “was closer to Presi¬
dent Truman than I was.”

Trickery in Texas

A partner of the Rockefeller associate, Standard Oil of California,
the tall, fair-haired, and dynamic Torkild “Cap” Rieber of the
Texas Company was an important link in The Fraternity. Bom in
Voss, Norway, in 1882, this strapping young Viking became an
American citizen at the age of twenty-two. Within weeks, he was
master of an oil tanker loading up from Spindletop, Texas. He
joined the Texas Company at twenty-three; within twenty years he
was chairman; he created a tanker fleet that gave his company enor¬
mous international power by 1933. He built the Barco pipeline in
Colombia, flying suspension bridges in sections from Texas to the
Andes, flinging them across 5,000-foot passes. He linked up with
Standard Oil of California in Saudi Arabia and in Bahrein in the
Persian Gulf, obtaining a monopoly through under-the-table deals
with the local rulers and the Japanese and German interests in those
areas.

“Cap” Rieber supplied Franco in the Spanish Civil War, shipping
oil from Galveston to Bordeaux in France and thence to Corunna,
with orders not to stop for inspection by any man-of-war, including
United States gunships. He supplied polymerization techniques to
I.G. Farben in the Ruhr and to I.G. Farben-connected companies
in Iran, Saudi Arabia, Egypt, and Syria with the approval of the
State Department.

In December 1939 he flew with Goring in a plane piloted by Pan
American Airways pilot Pete Clausen on a personally conducted
tour of the main centers of industrial Germany. He sailed his vessels
through the British blockade to fuel the U-boats after 1939, and si¬
multaneously sent more to aid Nazi corporations in South America.
He told Life magazine in 1940, “If the Germans ever catch [any
of my ships] carrying oil to the Allies they will have my hearty per¬
mission to fire a torpedo into her.”

Rieber was among those, like Davis, who had high hopes for Juan
Almazan’s bid for the Mexican presidency to succeed in favor of

TRADING WITH THE ENEMY

the Axis. On February 12, 1940, the American Embassy in Mexico
City reported that Texas Oil of Arizona was working in close collu¬
sion with affiliated oil groups including the Davis Oil Company in
directing the clandestine entry of arms into Mexico. The arms were
to support a possible military coup by Almazan in the event of his
defeat at the polls. The report said, “Pacific Fruit Express refrigera¬
tor cars are each loaded with arms in special wooden boxes so
shaped as to fit very conveniently along the sides of the wooden
strips or slotted flooring that permits the drainage of the ice water
to the drain pipes under the floor of these cars.” The report added,
“Oil company secret service operatives are ridiculing the Mexican
Government for the glass-eyed vigilance on the border, as they call
it, that enables them to execute adroit introduction of arms without
detection.” The report said, “I find that large sums of oil money
are being paid out on the border for protection and I also have ascer¬
tained that Customs House officials on the American side of the line
at Eagle Pass, Texas, have accepted money to facilitate the depar¬
ture of arms from the U.S.A. through this American port of entry.”

In 1940, Rieber worked in close collaboration with the Texas
Company’s German representative Nikolaus Bensmann, who was
a paid spy of Hermann Schmitz’s nephew Max Ilgner in Bremen.
Bensmann corresponded with Rieber and Rieber’s vice-president,
R. J. Dearborn, in a complicated cipher that was successfully de¬
signed to evade the British censorship office in Bermuda. The cipher
was so effective that, as Bensmann wrote to the Abwehr in Hamburg
on January 29, 1940, “Even lengthy espionage reports can be trans¬
mitted without running the risk of discovery.” By the code, Rieber
was able to send information to Bensmann about gasoline shipments
to the Canary Islands and secret patents being shipped clandestinely
to Berlin. These reports made their way to I.G. Farben’s N.W.7.
Intelligence Group, where they were examined by Ilgner. Rieber
visited Roosevelt to discuss the President’s attitude toward Germa¬
ny; intelligence on the meetings was transferred by Bensmann’s
code to Berlin. Rieber’s reports on every aspect of the petroleum
industry in the United States rivaled those supplied by General Ani¬
line and Film. Even restricted aircraft-production details were
given, in a fifty-eight-page report that should never have left Ameri¬
ca, prepared with the cooperation of spies in the offices of Secretary
of the Interior Harold L. Ickes and Secretary of the Navy James

TRICKERY IN TEXAS

V. Forrestal. The cipher was never broken. But here is a problem.
Why were these ciphers allowed to flow through Bermuda? Why
were they not stopped? There is no evidence they were forwarded
to London for examination.

Rieber obtained British Navicerts or certificates of authorization
to send his supplies to Germany through the British blockade after
Britain and Germany were at war. He bartered the shipments for
nine tankers built for him in Nazi yards and delivered to him under
the Norwegian flag with British consent after September 3, 1939.
In 1940, Rieber sold all German interests in Texas Company’s Ger¬
man patents for $5 million. He arranged contracts with I.G. Farben
in which he supplied plans of all the motors and installations of
American Navy yards and Army forts that he provided with gaso¬
line and oil.

Some of Rieber’s employees were loyal Americans. They wrote
to the State Department and even the President demanding that
Rieber be exposed. They alleged that he hired Gestapo agents as
lubrication engineers and that emissaries of the German military
authority in Norway were staying with Rieber in New York. On
August 2, 1940, an employee of Rieber’s Beacon Research Labora¬
tory wrote the State Department that Rieber was “a representative
of Hitler in this country.” The employee added that ”the entire ex¬
ecutive staff of the Texas Co. is pro-Nazi and openly boasts of it
as well as being willing to do all within its power to injure the En¬
glish and help the Germans.” The letter went on:

Two men from Germany are now at the laboratory, neither
one being a technical man, and as nearly as we can determine,
they are here solely for the purpose of learning all they can
about this country so that if an invasion is made, they will have
had a chance to send to the enemy all of the essential informa¬
tion about industrial plants and areas. They were “economists”
in Germany and were assigned to the work in engineering in
our laboratory—work they are not equipped to do. One of
these men is an outright propagandist for Hitler. Contacting
all the people of German extraction in America and holding
meetings at his home, preparing the way for the proposed Ger¬
man invasion of his country. He has taken pictures of the entire
area, completely mapped the district by photography and is

TRADING WITH THE ENEMY

constantly wandering over the district taking pictures of strate¬
gic areas.

The visit to New York that year of Nazi Fraternity associate Ger-
hardt Westrick (see Chapter 6) exposed Rieber to such unwanted
publicity that several shareholders in the Texas Company de¬
manded that there be a housecleaning and that Rieber must retire
for the company’s own good.

On August 20 fifteen directors of the corporation walked grimly
into the Texas Company boardroom on the twenty-fifth floor of the
Chrysler Building. They had to reach a decision on the future. They
argued for seven hours, trying to find some way to clean up the
board’s image after the unwelcome attention Texas Co. had been
getting. They knew that the press coverage of the Rieber-Westrick
association could cause a catastrophe in business. Walter G. Dun-
nington, the prominent Manhattan attorney who represented the
estate of railroad pioneer James J. Hill, the Texas Company’s big¬
gest single stockholder, insisted that Rieber must go. Prominent
banker William Steele Gray, Jr., and stockbroker Henry Upham
Harris agreed. Texas oilman John H. Lapham and Chicago banker
Walter J. Cummings wanted to have Rieber take a vacation until
the bad publicity blew over. But Rieber’s second-in-command, the
smooth-soft-voiced William Starling Sullivant Rodgers, was eager
to take Rieber’s place and made no bones about seeking Rieber’s
dismissal.

Rieber was asked to present his own point of view, which largely
consisted of boomingly delivered sweet nothings. The result was
that the board asked for his resignation. However, he continued to
exercise influence behind the scenes. The adroit W.S.S. Rodgers
took over from Rieber. He linked up with the Rockefeller empire
by going into partnership with Harry D. Collier, cheerful chairman
of Standard Oil of California, and the former Jersey Standard em¬
ployee Jimmy Moffett. Rodgers formed Caltex, which jointly
bought up millions of dollars’ worth of oil from the Arabian Sea.
The banker was James V. Forrestal, of the board of the Nazi Gen¬
eral Aniline and Film, who was about to become Under Secretary
of the Navy.

Saudi Arabia had intricate economic and political links with Hit¬
ler. On June 8, 1939, Khalid Al-Hud Al-Qarqani, royal counselor

TRICKERY IN TEXAS

of Ibn Saud, was received by Ribbentrop in Berlin. Ribbentrop ex¬
pounded to Khalid his general sympathy toward the Arab world
and pointed out that Germany and the Arabs were linked by a com¬
mon foe in the shape of the Jews. Khalid answered that Ibn Saud
attached the greatest importance to entering into relations with Ger¬
many. Ribbentrop was concerned that Ibn Saud might have a spe¬
cial relationship with the King of England. This had been played
up in the press. Khalid set Ribbentrop’s mind at ease. He stressed
that the king hated the British, who hemmed him in. By contrast,
Khalid stated, Ibn Saud was sympathetic toward Mussolini. The
conversation ended with salaams and Heil Hitlers.

At 3:15 p.m. on June 17, 1939, Hitler received Khalid Al-Hud
at the Berghof. The reception was given worldwide attention. It was
agreed throughout Europe that the meeting was a blow to Britain.
As a result of it Emil Puhl and Walther Funk's Reichsbank gave
Ibn Saud a credit of one and a half million Reichsmarks from Hit¬
ler’s personal treasury for the purchase of 8,000 rifles, 8 million
rounds of ammunition, light anti-aircraft guns, armored cars, a spe¬
cial Mercedes for the king, and the building for a munitions factory.
Soon afterward, Emil Puhl arranged a further loan of 6 million
marks that was paid in installments for the rest of the war.

These arrangements were in effect on November 28, 1941, when
the Grand Mufti of Jerusalem, the leading legalist of the Arab king¬
doms and among the bitterest enemies of the Jews, met with the
Fiihrer in Berlin. The Grand Mufti, with the authorization of the
Arab world, expressed his admiration of Hitler and named the same
enemies: the English, the Jews, and the communists. He promised
to guarantee assistance in war by acts of sabotage and revolution.
He offered to raise the Arab Legion from all available Moslem men
of military age. He indicated support for Vichy France. Hitler re¬
plied that Germany was locked in a death struggle with two citadels
of Jewish power: Great Britain and Soviet Russia. It went without
saying that all practical aid would be given to the Arab countries
in return for Arab support. The Fiihrer said, enjoining the Mufti
to “Lock it in the uttermost depths of your heart,” that the Fiihrer
would carry on the battle for the total destruction of the
Judeo-Communist empire in Europe, that the German armies
would soon reach the southern exit of Caucasia, and that as soon
as this happened, the Fiihrer would give the Arab world the assur-

100

TRADING WITH THE ENEMY

ance that its hour of liberation had arrived. He would force open
the road to Iran and Iraq and destroy the British world empire.

This crucial meeting took place five months after an arrangement
had been entered into by Caltex in collusion with Roosevelt. In June
1941, jolly James Moffett of Caltex went to the President with a
proposal. Moffett stated that in order to insure that Ibn Saud re¬
mained loyal to American interests (in other words, did not hand
Caltex over to Germany or supply General Erwin Rommel with
oil) the Treasury must advance $6 million a year to Ibn Saud. Mof¬
fett said this was with the knowledge that the $6 million per annum
would not in any way affect Ibn Saud’s ongoing relationship with
Hitler. Indeed, at the same time Emil Puhl was paying Ibn Saud
more than one million marks a year.

Roosevelt agreed to this deal with a Nazi collaborator. He was
greatly influenced by Jesse H. Jones, Secretary of Commerce, who
by now was apart owner of the Davis Oil Company. On July 18,
1941, following a meeting with Moffett, Roosevelt wrote to Jones:
rt Dear Jesse. Will you tell the British I hope they can take care of
the King of Arabia—this is a little far afield for us.”

Roosevelt bypassed Congress and entered into an arrangement
that was entirely against the rule book. Saudi Arabia was emphati¬
cally not a lend-lease country. If it were known that Ibn Saud as
Hitler’s close ally in Nazi pay was being bribed by the President
to protect an oil company, there would have been a major public
outcry. Roosevelt ordered Harry L. Hopkins, who was in charge
of Lend-Lease, to arrange with Britain for the money to be paid to
the king under the table. Lend-Lease to England was to be surrepti¬
tiously increased.

The arrangement continued for two years. Not only did money
flow to Arab countries but also a vast range of products, many of
which were in short supply in the United States, and all of these
were sent to organizations or individual merchants who were known
to have supported pro-Axis and subversive movements from the late
1930s until then. No screening of any kind was done by the United
States’ Middle East Supply Center on the reshipment to the Axis
of petroleum, mineral oil, fuel products, rubber, and automobiles.

When Bernard Berger, of the Board of Economic Warfare han¬
dling the Middle East, brought up complaints on shipments by

TRICKERY IN TEXAS

101

Caltex’s subsidiary Aramco* to the enemy, the State Department
and its local consulates put every kind of obstacle in his way. At
first their excuse was that the Middle East was British-sponsored
territory and that it was up to the British to check the loyalty of
enemy consignees. After excruciatingly slow dealings, the State De¬
partment agreed that U.S. diplomatic missions in Teheran, Bagh¬
dad, Jerusalem, Cairo, and Jidda should agree to the screening, but
months after the agreement was made, Berger was complaining (on
December 23, 1942) in a memorandum to his superior, H. A. Wil¬
kinson, that “No one has lifted a finger in implementing the propos¬
als.” He continued to point out that the failure of the State Depart¬
ment and British Intelligence was responsible for the dangerous
Fifth Column run by the Nazis in the Middle East. He urged the
appointment of a trade intelligence officer in the headquarters of
the American Commission in Cairo. Nothing was done about this.

Berger specifically mentioned the powerful Middle Eastern com¬
panies operating in Saudi Arabia, Syria, Iraq, and Iran; the Grand
Mufti of Jerusalem; and Hitler. He also named a smuggling ring
which, he discovered, was paying for imports through graft used
in obtaining export licenses. Berger was only just able to avert an
arrangement whereby an unnamed U.S. senator was about to pay
a bribe to Henry Wallace to grant commission for licensing. Yet
another company, with offices in Istanbul and New York, was also
known to be trading with the enemy with State and British coopera¬
tion.

In 1943, Forrestal appointed William Bullitt as his special Assis¬
tant Secretary. They were joined by Massachusetts Senator David
I. Walsh, chairman of the Senate Naval Affairs Committee, an
equally extreme isolationist America Firster and supporter of Irish
nationalism. These Machiavellis brought pressure to bear in Wash¬
ington to change the existing arrangements. They told Roosevelt
that British influence was “becoming excessive” in Saudi Arabia
and that the present deal should be stopped. Instead, the American
government should invest directly in Aramco. Apart from Forres-
tafs financial involvement, his and Bullitt’s motives were clear. De¬
spite the fact that Ibn Saud was still closely interlocked to Hitler,

Arabian-American Oil Company.

102

TRADING WITH THE ENEMY

they wanted the American government to aid him against British
influence.

The conspirators were afraid that Harold Ickes, who was still
fighting protection for the corporations, would object to these ar¬
rangements. On February 27, 1943, Bullitt dropped in to see the
embattled Secretary of the Interior and tried to shake his morale
by saying that State Department critics had “told me the boys took
pretty sharp exception to the fact you are showing interest in oil
outside of the United States. This is the exclusive function of the
Department of State.”

Forrestai and Bullitt were constantly in Ickes’s office to enlist him
in the cause. Unfortunately, he succumbed to their blandishments.
The two swayed Ickes into believing that there was a British threat
to American interests in Saudi Arabia. They even succeeded in hav¬
ing him talk to the President about the matter. Ickes listened when
Bullitt said at a meeting on May 29, 1943, “The British are already
laying plans to establish a branch bank in Arabia. I wouldn't put
it past the British to have King Ibn Saud assassinated, if necessary,
and set up a puppet who will see the oil situation through their
eyes.” Bullitt went on, “There is a secret agreement between Chur¬
chill and the President.” (If such an arrangement indeed were envis¬
aged, then it was because Ibn Saud was in league with the Nazis.)
The result was that Ickes helped to press through the arrangement
for investment in Aramco.

Meanwhile, Roosevelt, without telling Ickes, issued a document
authorizing a transfer of Saudi Arabia to the status of a Iend-lease
country, stating, “I hereby find that the defense of Saudi Arabia is
vital to the defense of the United States.” But the deal for direct
government investment in Aramco fell through.

Instead of giving the United States a rich supply of oil after the
deal was made, W.S.S. Rodgers and Harry Collier held America
to ransom. Meanwhile, the Nazi involvement in Saudi Arabia be¬
came more and more extreme. The State Department and Depart¬
ment of the Interior did not have to rely on Army Intelligence re¬
ports from Britain and their own G-2 agents to discover the extent
of that involvement. Details of it leaked into such liberal publica¬
tions as Asia and the Americas and Great Britain and the World.
From these sources, from German Foreign Office document
71/51181 (July 22, 1942) and from recently declassified secret re-

TRICKERY IN TEXAS

103

ports prepared by British Intelligence on Walter Schellenberg of the
Gestapo, it is possible to determine the extent of Nazi influence on
Ibn Saud in the middle of the war. The Grand Mufti of Jerusalem
was, until the time of Italy’s collapse as an Axis partner, living in
Rome, working with the agents of Kurt von Schroder’s friend and
associate Ambassador Franz von Papen in Ankara, Turkey, to send
out agents through the Arab states. In Saudi Arabia fanatical Arabs
were trained as Nazis at German universities and schools. From a
headquarters in a carpet shop in Baghdad, Dr. Fritz Grobba, Ger¬
man minister to Iraq, ran espionage rings, and subsidized Arabic
newspapers and clubs in the Saudi Arabian capital of Jidda. The
German TransOcean News Agency functioned as an espionage and
propaganda agency in Jidda. The Nazi spy Waldemar Baron von
Oppenheim, until recently in the United States and Syria, was head¬
quartered in Saudi Arabia. Many Nazis flocked in disguised as tour¬
ists or technicians. They constructed roads and built factories. They
formed German-Arab societies and learned Arab language so as to
address crowds and whip them up into a fanatical support of Hitler.
Ibn Saud, as always, played both ends against the middle, professing
admiration for Roosevelt and Churchill while authorizing his per¬
sonal representative Rashid Ali El-Kilani to continue to represent
him in Berlin and address the Moslem society there.

Wilhelm Keppler, founder of the Circle of Friends, friend of
ITT’s Sosthenes Behn, and under secretary of the German Foreign
Office with substantial shareholdings in I.G. Farben, made Saudi
Arabia his special provenance. He laced the country with economic
agents who spread out as far as Iran and Iraq. By 1944 the United
States was seriously short of oil. It cost Aramco ten cents a barrel
to bring up oil in Bahrein and twenty cents in Arabia, plus a royalty
of fifteen cents to the Sheikh of Bahrein and twenty-one cents to
Ibn Saud in addition to the existing bribe. Suddenly, W.S.S. Rodgers
of Texas Company and Harry Collier of California Standard in¬
formed Ickes that the price to America would be $1.05 a barrel,
take it or leave it. With his back against the wall, Ickes had to ac¬
cept. Worse, Rodgers and Collier paid no income tax on the sale
because they were registered in the Bahamas. They made $120 mil¬
lion at the expense of the U.S. government—on an investment of
no more than $1 million.

Ickes tried to buy the oil companies’ stock in the interests of na-

104

TRADING WITH THE ENEMY

tional defense and the economic needs of the nation. But he encoun¬
tered constant resistance from Collier and Rodgers. First Collier
would agree, then Rodgers would hold out; then they reversed their
positions. They also said that they had doubled Aramco’s royalty
payments to Ibn Saud. Ickes checked with the Arabian Embassy
and found that the statement was a lie; he blamed Forrestal for not
having the sales figures checked.

How was this possible? Because Caltex and Aramco still had
plants in the State Department.

What grievous situation existed in the State Department that al¬
lowed such infiltration? The elements of anti-Semitism and secret
sympathy for the Nazis* form of government had been there since
the early 1930s. In the Department’s uncomfortable, crowded, and
antiquated building, there were daily collisions between the embat¬
tled liberal faction and the right-wing extremists. Behind the scenes
as ambassador-at-large, William Bullitt was the prime schemer in
assuring that the extreme right wing in the Department retained
a sophisticated neutralism in time of war. He set out to remove the
single most powerful force against world fascism: Sumner Welles.

Welles was a strong opponent of The Fraternity’s deals with
Saudi Arabia and South America. Intelligence reports told him how
deeply Hitler had penetrated Saudi Arabia, that Ibn Saud was one
with Hitler despite Saudi Arabia’s phony breaking off of diplomatic
relations with the Axis—a sop to the public—and that much of the
investment of the American government in pipelines on behalf of
Caltex/Aramco would go straight into enemy hands. He was op¬
posed to the arrangement with Vichy because he believed that in
propping up Marshal Henri Petain’s regime the United States was
allowing its gates to be left wide open to Hitler’s commercial, politi¬
cal, and espionage agents.

Welles’s personality was cold, authoritative, and detached. Tall,
elegant, and flawlessly tailored, he came from the top of the East
Coast Establishment. Wealthy in his own right, a career diplomat
from the first, he had been at school with Roosevelt at Groton and
frequently entertained Franklin and Eleanor in his exquisite house
at Oxon Hill. His wife was socially prominent, and he had a growing
family. Despite his strongly liberal stance he was acceptable to the
Establishment because he seemed to represent the finest virtues of
the ruling class.

TRICKERY IN TEXAS

105

Yet he had a weakness. He was a bisexual. At night this pillar
of the Washington community would disappear from his house on
the excuse of working late at the office and, in disguise, make his
way into parks, toilets, and places of assignation and perform inter¬
course with blacks. He presumably paid for sex because he was
afraid that a genuine affair would expose him.

William BulliU had long heard rumors about Welles. When
Welles was ambassador to Cuba, there had been talk of relationships
with young Cuban boys, some of them underage. Welles had left
the Caribbean under a heavy cloud. Roosevelt had chosen to ignore
the stories.

Bullitt had gone to see J. Edgar Hoover in 1940 after his return
from Paris and asked him to investigate Welles. Hoover, who was
himself alleged to be homosexual, knew all of the secret places
where the homosexual community met. He decided to act at once.

On September 16, 1940, a solemn funeral was held in the chamber
of the House for the beloved speaker William Bankhead. Two spe¬
cial trans left Washington for Jasper, Alabama, for the burial. On
the homebound train were Roosevelt and virtually his entire Cabi¬
net, including Welles.

As the train chugged into the night, two Pullman porters Hoover
had hired went into Welles’s bedroom. They first flirted with him
and then blatantly offered themselves for a price of $100. Welles,
who was drunk, seemed to ignore the fact that the President, Attor¬
ney General Robert Jackson, Harold Ickes, and practically every¬
body in the government was in the same car.

Hoover had his men stationed in the adjoining bedroom. Welles’s
drunken conversation, and the sexual acts that followed it, were
noted down.

When the train returned, Hoover’s men presented the evidence
to him. Bullitt had a meeting with Hoover and went over the report.
He took it to Roosevelt in the Oval Office. The President refused
to read it but instructed Hoover the next day to obtain more evi¬
dence. He was evidently playing for time, worried about a confron¬
tation with Welles.

Bullitt and Hoover spent the next three years amassing a thick
dossier on Welles. “Pa” Watson, secretary to the President, was in
charge of the investigation. Bullitt absurdly charged that Welles’s

106

TRADING WITH THE ENEMY

wife was having an affair with a Russian spy and that Welles was
being blackmailed by communists to leak State secrets to Russia.

On October 24, 1942, Hoover called at the Wardman Park Hotel
apartment of Cordell Hull. Hull had asked to see him, saying that
he was gravely concerned by stories about the improper actions of
Welles. He told him that he knew Hoover had made an investigation
and asked whether Hoover would give him the report so that he
could evaluate the evidence. Hoover confirmed that he had made
the report on behalf of Roosevelt. He suggested that Hull contact
another of Roosevelt’s secretaries, Marvin McIntyre, to obtain the
report. Hull said he would deal with it.

Hull and Hoover kept pressing Roosevelt to look at the file. On
April 27, 1943, Senator Owen Brewster of Maine called to see Hoo¬
ver. He had discovered that Hoover had made the investigation and
knew whom the FBI had questioned. Hoover told him that indeed
an investigation had been made but that “no conclusions have been
reached.” Brewster went to see Hull and Biddle and decided to take
the matter up with the Truman defense committee to investigate
the whole affair. Biddle, evidently alarmed by the potential of such
a public inquiry, decided to go to the President.

Faced with the fact that his long cover-up for Welles might be
revealed, Roosevelt was forced to bow to pressure from Biddle and
his supporters and ask for Welles’s resignation. A delighted Bullitt
suggested coolly to Roosevelt that perhaps Welles should be sent
to Russia as a diplomatic representative. Roosevelt was not im¬
pressed. Not only did he disconnect all contact with Welles, he ver¬
bally thrashed Bullitt and never spoke to him again. It was the ruin¬
ation of Welles’s career, but Bullitt never recovered from the results
of his expose.

The catastrophe wrecked the State Department overnight.
Welles’s carefully built-up policy of opposing appeasement in time
of war was shattered at a blow. The Department fell apart.

The exposure of Welles distracted attention from the fact that
Aramco supporter David I. Walsh of Massachusetts was exposed
in a similar scandal.

The scandal broke when Naval Intelligence officers and city de¬
tectives raided a homosexual brothel in Brooklyn and arrested the
proprietor, Gustave Beekman. District Attorney William O’Dwyer
and Naval Intelligence officers discovered that the brothel was a

TRICKERY IN TEXAS

107

nest of Nazi agents. One of those who mingled with those agents
was Senator Walsh. In an affidavit made in Raymond Street jail fol¬
lowing his arrest, Beekman gave detailed testimony about Walsh.
He said that Walsh used to come to his bordello on Sunday after¬
noons—at least ten times between July 1941 and March 1942. Beek¬
man reported that he saw the senator in close conversation with an¬
other customer, described only as “Mister E," who was known as
“the Nazi’s ace spy in the U.S.” Mister E would arrive with sailors
and would question them on their ships, their comings and goings
and destinations. Mister E was accompanied by a number of Ger¬
mans who were also acting as espionage agents. The spies special¬
ized in luring soldiers and sailors and determining information from
them.

According to Beekman’s attorney, Harvey Strelzin, who is still
in practice in New York, Roosevelt decided to use the episode. Since
Walsh was restricting supplies of ball bparings, oil, and other strate¬
gic products to the Navy in the interests of isolationism, Roosevelt
decided to make a deal with Walsh. If he let Walsh off the hook,
Walsh must aid the war effort. Walsh agreed instantly. Strelzin says
Roosevelt asked Hoover to have Beekman reverse his testimony.
Hoover grilled Beekman cruelly and impersonally with several of
his toughest men for several hours around the clock until Beekman
cracked and changed his story. Later he tried to change it back on
the offer of a substantial check from the New York Post, but it was
too late. At Beekman’s trial under the famous Judge Samuel Lei-
bowitz, Beekman told the truth.

The isolationist clique protested the accusations and demanded
that there be a full public exoneration for Walsh. At a stormy meet¬
ing of the Senate, Burton K. Wheeler and two other isolationists,
Gerald P. Nye and Bennett C. Clark, jumped to their feet and called
in concert for a sweeping investigation with a view to punishment
of all persons who had conspired to smear Walsh.

Wheeler shouted, “This is a diabolical attempt on the part of cer¬
tain individuals ... to smear every member of the Senate who has
disagreed with them on matters of foreign policy." Senator Clark
urged that Mrs. Dorothy S. Backer, “the old hussy who runs the
New York Post ," should be “brought before the bar of the Senate."

Wheeler attacked Judge Leibowitz: “If I were a Federal judge,
I would have him impeached," and, ironically in the context, he

108

TRADING WITH THE ENEMY

called for a cancellation of the financing of the Post by the Federal
Reserve Bank. Senator Nye urged, “Let this matter not be dropped
here. An investigation will reveal a secret society which for two
years have [sic] been engaged in gathering such information as
would permit the smearing of individual members of the Senate.”

The Nation investigated the matter and found that indeed Walsh
had been seen in conversation with suspected Nazi spies who lured
soldiers and sailors to the “house of degradation” for the purpose
of obtaining military secrets. The magazine discovered that the FBI
had made Beekman recant his original statement after hours of
high-pressured questioning. The Nation wrote, “So summary an at¬
tempt to bury an unpleasant affair may involve the sidetracking of
a full and open investigation of the house in Pacific Street.” The
editorial added, “We can’t afford to encourage [Nazi Fifth Colum¬
nists] by covering up the case. . . . The Nation strongly supports
the Post's demand for a full and public inquiry.”

It goes without saying that the “full and public inquiry” never
took place and that Walsh remained chairman of the Naval Affairs
Committee. The following year he was in part responsible for the
Aramco swindle.

On October 5,1942, Judge Samuel Leibowitz sentenced Beekman
to five to twenty years in Sing Sing. In March 1947, James Moffett
of Caltex, gravely ill and in agony in his hospital bed following a
major operation, decided that with death facing him, he should un¬
burden himself of the details of the Aramco affair. He had another
motive that was slightly less altruistic: Caltex owed him $6 million
for his rake-off on the deal.

He went to Welles’s nemesis, Senator Owen Brewster, and asked
for a full-scale inquiry into Aramco. He made such a stink in the
press that Brewster had to go ahead. Inevitably, since Walsh had
been deactivated, Brewster appointed Burton K. Wheeler to investi¬
gate Moffett’s charges. Barely audible, Moffett gave a halting ad¬
dress on May 5 in which he outlined the plan. The committee called
for Roosevelt’s files in the matter. President Truman declined to
permit a search of the late President’s papers at Hyde Park. On May
7, 1947, the executors of Roosevelt’s estate explicitly denied permis¬
sion for a search, citing a July 16, 1943, directive by the President
that all his letters of a sensitive character should be locked up for
between ten and fifty years.

TRICKERY IN TEXAS

109

On May 25, because of overwhelming public pressure, part of the
file showing Moffett’s original correspondence with the White
House was revealed. But the executors of the Roosevelt estate
blocked the bulk of the appropriate documents.

The only ray of light for Moffett in this harrowing ordeal was
that Truman was forced by public pressure to remove Wheeler from
the special investigative council on June 4.

Moffett was unable to push Aramco to produce the text of the
oil concession agreement with Ibn Saud. The council ruled that the
request for the document should be quashed “to protect the defen¬
dant, the government of Saudi Arabia and the government of the
United States from annoyance and embarrassment.”

As the facts gradually came to light despite every effort to sup¬
press them, Congress was rent apart by violent debates.

On April 25, 1948, Senator Brewster delivered a broadside to an
almost empty and notably indifferent Senate. He described the Ar¬
amco action as “an amazing picture of corporate greed when our
country was in its most bitter need.” Senator William Langer of
North Dakota said, “The men who have put over this oil deal ought
to be in the penitentiary. These men, who have called upon Ameri¬
can boys to go into foreign lands to protect their oil interests, are
traitors to America. They ought to surrender their citizenship or
have it taken away from them.” Brewster and Langer charged that
three former Navy Department aides in the Justice Department
were at that moment blocking a new investigation into the scandals.
The investigation was indeed blocked.

On February 1, 1949, Moffett brought suit in federal court in New
York for $6 million in damages against Caltex’s Aramco on the
ground that he had made the original arrangements between Roose¬
velt and Secretary of Commerce Jesse Jones and that he had not
been given his promised rake-off.

Jones tried to avoid appearing at the hearing. The matter was so
embarrassing to him that he feigned illness. But Moffett had connec¬
tions. He arranged for a friend of his in the FBI to follow Jones
to the Twenty-Nine Club on East Sixty-first Street on the night that
Jones was supposed to be having a heart attack. The FBI report
read: “The witness Jones played poker on the night of November
16, 1948, until 2 a.m. and in the course of the evening the stakes
ranged as high as $4,000 a hand and on one occasion the said Jones

110

TRADING WITH THE ENEMY

backed a straight in a pot involving approximately $4,000 against
four 4’s.” The report continued, “No doubt backing a straight
against four 4’s with $4,000 in the pot has been the cause of many
a heartache, but to my knowledge it never has been recommended
as a cure for heart trouble.”

Next day, Federal Judge Samuel H. Kaufman said that Mr. Jones
must be compelled to appear and that “if Mr. Jones indicated signs
of fatigue as a result of his poker game” he could retire from the
proceedings for a few moments during the course of the day.

Jones appeared on November 26. Asked for records of the trans¬
actions for Aramco, he said jovially, “I don’t keep a diary because
I don’t plan to write a book like Mr. Morgenthau and some others
and I kept no Dictaphone in my desk—I’d like to put that into the
record, too!” Moffett’s attorney, William Power Maloney, who had
been the scourge of Nazi agents until Senator Wheeler had him dis¬
lodged from the Nazi Sedition Trials of the 1940s, pressed Jones
for more details. Jones answered that his memory was “vague of
the entire matter” and that he had “even forgotten the name of his
secretary” whom Maloney was trying to find as a material witness.
Asked about Roosevelt’s note suggesting to him that the British
should “take care of the King of Arabia,” Jones gave a calculated
reply. He said, “I scribbled the note during a Cabinet meeting,
handed it to the President and asked him to write it down in his
own handwriting, so I could let them know it was his decision as
well as mine.”

Jones claimed he had no legal authority to grant the loan and
had had no intention of doing so, but that he wanted to let “a Mr.
Moffett and a Mr. Rodgers” who had discussed the loan with him
know that they “could not get any help from the United States Gov¬
ernment.” This curious example of perjury was presumably in¬
tended to absolve Jones of any complicity in the illicit measure. The
implication was that Moffett and Rodgers* had gone ahead on their
own.

Suddenly, Jones added, “Judge Kaufman, I’d like to ask the
bench a question off the record.”

The judge told him to go right ahead.

Jones said, “I’ve been given $195 by Mr. Maloney and $225 by
♦W.S.S. Rodgers of the Texas Company.

TRICKERY IN TEXAS

111

the other side to come here in January to testify. I want to know
whether I have to return the money because I think I ought to keep
it.”

Judge Kaufman told Jones, “You will have to return the money
if the subpoena is dismissed.”

“Oh, don’t do that. Judge, don’t do that,” Jones replied, to loud
laughter in court.

It was in this spirit of levity that the entire case was conducted.
Inevitably, Aramco came out the winner. Moffett was awarded one
million one hundred dollars by the jury in settlement of his claims.
But the judgment was set aside by the trial judge.

The Telephone Plot

During the early days of 1942, Karl Lindemann, the Rockefel¬
ler-Standard Oil representative in Berlin, held a series of urgent
meetings with two directors of the American International Tele¬
phone and Telegraph Corporation: Walter Schellenberg, head of the
Gestapo’s counterintelligence service (SD), and Baron Kurt von
Schroder of the BIS and the Stein Bank. The result of these meetings
was that Gerhardt Westrick, the crippled boss of ITT in Nazi Ger¬
many, got aboard an ITT Focke-Wulf bomber and flew to Madrid
for a meeting in March with Sosthenes Behn, American ITT chief.

In the sumptuous Royal Suite of Madrid’s Ritz Hotel, the tall,
sharp-faced Behn and the heavily limping Westrick sat down for
lunch to discuss how best they could improve ITT’s links with the
Gestapo, and its improvement of the whole Nazi system of tele¬
phones, teleprinters, aircraft intercoms, submarine and ship phones,
electric buoys, alarm systems, radio and radar parts, and fuses for
artillery shells, as well as the Focke-Wulf bombers that were taking
thousands of American lives.

Sosthenes Behn, whose first name was Greek for “life strength,’’
was bom in St. Thomas, the Virgin Islands, on January 30, 1882.
His father was Danish and his mother French-Italian. He and his
brother Hernand, later his partner, were schooled in Corsica and
Paris.

In 1906, Behn and his brother took over a sugar business in
Puerto Rico and snapped up a small and primitive local telephone
company by closing in on a mortgage. Realizing the potential of
the newfangled telephone, Behn began to buy up more companies
in the Caribbean. He became a U.S. citizen in 1913. In World War
I, Behn served in the Signal Corps as chief of staff for General
George Russell. He learned a great deal about military communica¬
tions systems, and his services to France earned him the Legion
d’Honneur. Back in the United States, Behn became associated with
AT&T, of which Winthrop Aldrich was later a director. In 1920,

113

114

TRADING WITH THE ENEMY

Behn’s work in the field of cables enabled him to set up the ITT
with $6 million paid in capital. Gradually, he spun out a web of
communications that ran worldwide. He soon became the telephone
king of the world, making deals with AT&T and J. P. Morgan that
resulted in his running the entire telephone system of Spain by 1923.
His Spanish chairman was the Duke of Alba, later a major sup¬
porter of Franco and Hitler. In 1930 Behn obtained the Rumanian
telephone industry, to which he later added the Hungarian, Ger¬
man, and Swedish corporations. By 1931 his empire was worth over
$64 million despite the Wall Street crash. He became a director
of—inevitably—the National City Bank, which financed him along
with the Morgans.

Behn was aided by fascist governments, into which he rapidly in¬
terlocked his system by assuring politicians promising places on his
boards. He ran his empire from 67 Broad Street, New York.

His office was decorated with Louis XIV antiques, rich carpets,
and portraits of Pope Pius XI and various heads of fascist states.
He traveled frequently to Germany to confer with his Nazi direc¬
tors, Kurt von Schroder and Gerhardt Westrick. On August 4,
1933, he and his representative in Germany, Henry Mann of the
National City Bank, had a meeting with Hitler that established a
political relationship with Germany that continued until the end
of World War II. The Fiihrer promised aid and protection always.

Through Mann, Behn was closely connected with Wilhelm Kep-
pler, who formed the Circle of Friends of the Gestapo and intro¬
duced him to Schroder and Westrick. Not only did Keppler,
Schroder, and Himmler see to it that Behn’s German funds and in¬
dustries were untouched by forfeit or seizure, but Schroder arranged
for Emil Puhl at the Reichsbank to pay off ITTs bills.

Behn became an important aid to his friend Hermann Goring.
In 1938 he and Schroder obtained 28 percent of the Focke-Wulf
company; they greatly improved the deadly bomber squadrons that
later attacked London and American ships and troops. When Aus¬
tria fell in 1938, Behn organized his Austrian company under the
management of Schroder and Westrick and aided in the expulsion
of Jews. Some Nazis tried to take over the Austrian offices, but Behn
again visited Hitler at Berchtesgaden and made sure that ITT would
be allowed to continue in business.

In Madrid during the Spanish Civil War, Behn supplied tele-

THE TELEPHONE PLOT

115

phones to both sides, gradually shifting over his commitments to
Franco when it was obvious that Franco was winning. He spent
months in the shell-shattered Madrid headquarters known as the
Telefonica, playing both ends against the middle and driving, with
immunity given by both sides, to and from the Ritz. He gave lavish
parties for both the British and American press, while negotiating
through the Bank for International Settlements so that Franco
could buy up ITTs Loyalist installations.

When Hitler invaded Poland, Behn and Schroder conferred with
the German alien property custodian, H-J Caesar. The result was
that the ITT Polish companies were protected from seizure for the
duration.

Another protector of Behn’s in Germany was ITTs colorful cor¬
poration chairman, Gerhardt Westrick. Westrick was a skilled com¬
pany lawyer, the German counterpart and associate of John Foster
Dulles. Westrick’s partner until 1938, the equally brilliant Dr. Hein¬
rich Albert, was head of Ford in Germany until 1945. Both were
crucially important to The Fraternity.

At the beginning of 1940, Behn decided to have Westrick go to
the United States to link up the corporate strands that would remain
secure throughout World War II. German Foreign Minister von
Ribbentrop was equally concerned that Westrick undertake the mis¬
sion. Westrick represented in Germany not only Ford but General
Motors, Standard Oil, the Texas Company, Sterling Products, and
the Davis Oil Company.

Since Behn had to be engaged in business in Lisbon, he arranged
that Westrick would be hosted by Torkild Rieber in the United
States. Behn also called up the Plaza Hotel in New York where he
kept a permanent suite, and he had it placed at Westrick’s disposal.

Westrick traveled via San Francisco in March 1940, where he
handed $5 million of Farben-ITT money on Behn's and Ribben-
trop’s joint authorization to Nazi Consul General Fritz Wiede¬
mann. The money was to insure the cooperation of small American
businessmen with the Third Reich,

Rieber met Westrick at the Plaza on April 10, 1940, and arranged
a press conference for him. The reporters were delighted with the
German. Burly and bullnecked, with a strong, guttural voice, he
had lost his right leg to British shells in World War I. He had an
aluminum leg attached to his body by complicated webbing and a

116

TRADING WITH THE ENEMY

silver rod. And he had with him a mysterious and glamorous secre¬
tary, the Baroness Ingrid von Wallenheim.

After a series of meetings with the Fraternity leaders, Westrick
gave an interview to The New York Times on April 12. He echoed
precisely the views of Emil Puhl and Dr. Walther Funk. He said
that America must release its vast holdings in gold, amounting to
$7,500 million in notes and $18 billion in coinage, to the Nazi gov¬
ernment and its conquered territories. Westrick insisted that the
loan should be made at a mere one and a half percent interest. He
urged that the money be shipped to the Bank for International Set¬
tlements for transfer to the Reichsbank. He wanted an end to the
economic friction that caused wars and he sought peace forev¬
er—presided over by the Triumvirate of Wall Street, the Reichs¬
bank, and the Bank of Japan, sustained on a river of gold. Indeed,
as the Times correspondent pointed out rather sharply, Westrick’s
views of free trading instead of barter were remarkably similar to
those of Secretary of State Cordell Hull.

There was, of course, no mention of such inconvenient subjects
as Austria, Czechoslovakia, and Poland in Westrick’s visionary pro¬
nouncement.

A letter appeared in the Times on April 15, written by Karel
Hudek, acting consul general representing the Czechoslovakian re¬
public in exile, saying, inter alia, “I think that all downtrodden na¬
tions—Austria, Czechoslovakia, Poland, Denmark, Norway and
some others, who may join us in a short time, will thank Dr. Wes¬
trick for his kind endeavors.. . . Dr. Westrick is right when he says
that wars come from economic causes. I can speak here for my
country: they invaded us and promptly took over all industry—yes,
that is economic cause.”

On June 26, 1940, his Fraternity associates gave a party for
Westrick at the Waldorf-Astoria Hotel to celebrate the Nazi victory
in France. This was, of course, only appropriate. Fraternity guests
at this scorpions’ feast included Dietrich, brother of Hermann
Schmitz of General Aniline and Film; James D. Mooney of General
Motors; Edsel Ford of the Ford Motor Company; William Weiss
of Sterling Products; and Torkild Rieber of the Texas Company.
These leaders of The Fraternity agreed to help in the free-trade
agreements that would follow a negotiated peace with Germany.

Westrick leased a large house in Scarsdale, New York, from one

THE TELEPHONE PLOT

117

of Rieber’s Texas Company lawyers. He was seen entering and leav¬
ing the house in the company of prominent figures of the Nazi gov¬
ernment and American industry. The New York Daily News sent
reporter George Dickson to investigate the meaning of a big white
placard with a large G on it in a window of a front second-floor
bedroom. The press generally was suggesting this formed some kind
of code for use by Nazi agents. Dickson wrote in his column: “Phan¬
tom-like men in white have been responding by day and night to
mysterious signalling from a secluded Westchester mansion—now
disclosed as the secret quarters of Dr. Gerhardt A. Westrick
—invariably they carry carefully wrapped packages . . . they salute
with all the precision of Storm Troopers, deliver the packages, sa¬
lute again—and silently depart . . . super-sleuthing finally solved
the mystery just before last midnight.” Then Dickson delivered his
death blow to the story: The G sign was an invitation to the Good
Humor man to deliver his famous ice cream on a stick!

J. Edgar Hoover of the FBI determined that Westrick had ille¬
gally obtained his driver’s license by lying that he had no infirmities.
The purpose was achieved: Walter Winchell, Drew Pearson, and
other patriotic columnists blew up Westrick’s Nazi connections out
of all proportion, and Westrick was asked by German Charge
d’Affaires Hans Thomsen to return to Germany at once.

But before he was ordered home, Westrick had been extremely
busy. He had gone to see Edsel and Henry Ford at Dearborn on
July 11 at the Fords’ urgent invitation, conferring with the Grand
Old Man and his son on the matter of restricting shipment of impor¬
tant Rolls-Royce motors to a beleaguered Britain that urgently
needed them. He also visited with Will Clayton, Jesse Jones’s asso¬
ciate in the Department of Commerce, who went with Westrick to
see Cordell Hull to plead for the protection of German-American
trade agreements on behalf of his friends in the Texas cotton indus¬
try.

Clayton was the chairman of the U.S. Commercial Company, and
he helped protect Fraternity interests during World War II. Others
of Westrick’s circle included, interestingly enough, William Dono¬
van, who became head of the OSS (precursor of the CIA) on its for¬
mation in 1942. Westrick also made significant contacts with good
and true friends at Eastman Kodak and Underwood before return¬
ing home via Japan and Russia.

118

TRADING WITH THE ENEMY

After Pearl Harbor, at meetings with Kurt von Schroder and
Behn in Switzerland, Westrick nervously admitted he had run into
a problem. Wilhelm Ohnesorge, the elderly minister in charge of
post offices, who was one of the first fifty Nazi party members, was
strongly opposed to ITT’s German companies continuing to func¬
tion under New York management in time of war. Behn told Wes¬
trick to use Schroder and the protection of the Gestapo against Oh¬
nesorge. In return, Behn guaranteed that ITT would substantially
increase its payments to the Gestapo through the Circle of Friends.

A special board of trustees was set up by the German government
to cooperate with Behn and his thirty thousand staff in Occupied
Europe. Ohnesorge savagely fought these arrangements and tried
to obtain the support of Himmler. However, Schroder had Himm¬
ler’s ear, and so, of course, did his close friend and associate Walter
Schellenberg. Ohnesorge appealed directly to Hitler and condemned
Westrick as an American sympathizer. However, Hitler realized the
importance of ITT to the German economy and proved supportive
of Behn.

The final arrangement was that the Nazi government would not
acquire the shares of ITT but would confine itself to the administra¬
tion of the shares. Westrick would be chairman of the managing
directors.

Thus, an American corporation literally entered into partnership
with the Nazi government in time of war.

Westrick and Behn appointed Walter Schellenberg as a director
with a nominal salary in return for his protection and for his assis¬
tance in insuring the company’s continuing existence. General Fritz
Thiele, second-in-command of the signal corps, was added to the
directorial board because army stock orders were crucial in keeping
the company afloat. Hitler was gravely suspicious of Thiele for
drawing money from an American corporation in time of war and
sought to dislodge him, but Himmler stepped in as a protector.

Ohnesorge did not give up. In 1942 he again tried to induce
Himmler to sign a warrant of arrest against Westrick for high trea¬
son. His idea was to keep Westrick in a concentration camp while
he disposed of the shares of ITT. Once again, Schroder stepped in
and there was no further trouble.

Not only did Behn own all of the German companies of ITT out¬
right through the war but he also ran ITT factories in the neutral

THE TELEPHONE PLOT

119

countries of Spain, Portugal, Switzerland, and Sweden, which con¬
tinued to buy, sell, and manufacture for the Axis. Behn and his di¬
rectors made repeated and persistent efforts to obtain licenses for
dealings with the enemy. When Morgenthau refused the licenses,
they proceeded anyway. They also exported materials to their sub¬
sidiaries in neutral nations producing for the enemy.

After Pearl Harbor the German army, navy, and air force con¬
tracted with ITT for the manufacture of switchboards, telephones,
alarm gongs, buoys, air raid warning devices, radar equipment, and
thirty thousand fuses per month for artillery shells used to kill Brit¬
ish and American troops. This was to increase to fifty thousand per
month by 1944. In addition, ITT supplied ingredients for the rocket
bombs that fell on London, selenium cells for dry rectifiers,
high-frequency radio equipment, and fortification and field commu¬
nication sets.

Without this supply of crucial materials it would have been im¬
possible for the German air force to kill American and British
troops, for the German army to fight the Allies in Africa, Italy,
France, and Germany, for England to have been bombed, or for
Allied ships to have been attacked at sea. Nor would it have been
possible without ITT and its affiliates for the enemy to have kept
contact with Latin American countries at a time when Admiral
Raeder of the German navy contemplated an onslaught on coun¬
tries south of Panama. It is thus somewhat unsettling to note the
following memorandum sent by the State Department lawyer R. T.
Yingling to Assistant Secretary of State Breckinridge Long on Feb¬
ruary 26, 1942. It read in part:

It seems that the International Telephone and Telegraph Cor¬
poration which has been handling traffic between Latin Ameri¬
can countries and Axis-controlled points with the encourage¬
ment or concurrence of the Department of State * desires some
assurance that it will not be prosecuted for such activities. It
has been suggested that the matter be discussed informally with
the Attorney General and if he agrees the Corporation can be
advised that no prosecution is contemplated ... if the Interna¬
tional Telephone and Telegraph Corporation feels that activi-

* Author’s italics.

120

TRADING WITH THE ENEMY

ties of the nature indicated above which it may be carrying on
at the present time in Latin America are within the purview
of the Trading with the Enemy Act it should apply to the Trea¬
sury Department for a license to engage in such activities.

Whether or not the license was issued, the trading was continued
with the assurance that neither the State Department nor the De¬
partment of Justice would intervene. Armed with this convenient
endorsement, Sosthenes Behn was constantly flying in and out of
Spain during the war for transactions with the enemy. He owned
not only a telephone operating company in Spain, but a major man¬
ufacturing company as well: Standard Electrica. In the middle of
1942, after a visit to Madrid, Behn had the audacity to go to the
State Department and talk to Dean Acheson’s staff to obtain per¬
mission for his Spanish subsidiary to purchase materials in Ger¬
many for use in Spain. When this was questioned, Behn said that
there was a likelihood of the Franco government’s taking over the
Spanish properties unless they complied. It was a familiar argu¬
ment, but Behn, who had tried to sell the Spanish company to that
same government a year earlier, knew perfectly well that Franco
had no intention of running the complex corporation. With a unique
gift of understatement, U.S. Ambassador to Spain Carlton J. H.
Hayes wrote to the State Department on August 15, 1942, “The
Embassy . . . feels that the ITT may not have always placed our
war efforts above its own interests.” The letter was written at a time
when ITT was manufacturing military equipment for the German
army in Spain.

On September 28, 1942, Ambassador John G. Winant in London
telegraphed Washington urgently recommending that the ITT
Swiss and Spanish subsidiary, Telephone and Radio, “be issued li¬
censes to trade with Nazi Germany.” State Department officials had
a meeting with Morgenthau and Harry Dexter White saying that
it was essential ITT be allowed to trade within enemy territory.
Morgenthau and White flatly refused to countenance any such trad¬
ing.

In January, February, and March 1943, Behn was back in Barce¬
lona and Madrid for conferences with Colonel Wilhelm Grube of
the German army signal corps on the question of forming the Ger¬
man Standard, or European Standard (as it was later known), Cor-

THE TELEPHONE PLOT

121

poration amalgamating all ITT companies throughout the whole
of Western Europe. Grube carried out Behn’s instructions to the
letter.

Shortly after Pearl Harbor, Roosevelt had asked Nelson Rocke¬
feller to prepare a study of the communications systems of South
America. On May 4, 1942, the President had sent a memorandum
to Henry Wallace in his role as chairman of the Board of Economic
Warfare, ordering him to ensure disconnection of all enemy nation¬
als in the radio, telephone, and telegraph fields. He had urged Wal¬
lace to eliminate all Axis control and influence in telecommunica¬
tions in Latin America, acquire hemisphere interests of all Axis
companies, ensure loyalty in employees, and disrupt direct lines to
the enemy. He had asked for a corporation to be set up to handle
the financial aspects of the program with the assistance and advice
of an advisory committee.

Wallace approached Secretary of Commerce Jesse H. Jones to
make the necessary arrangements. Jones set up the U.S. Commer¬
cial Company to take charge of the matter. It was a characteristic
choice. The company's second-in-command was none other than
Robert A. Gantt, vice-president of ITT itself. Gantt continued to
receive salary from ITT while holding his position with the U.S.
Commercial Company. The rest of the board was largely composed
of directors of ITT or RCA (also a wartime partner in
Nazi-American communications companies).

The Hemisphere Communications Committee sat with a mixed
Treasury, State, Army, Navy, and U.S. Commercial Company
board throughout World War II, doing little more than discussing
possible actions against Axis-connected companies.

A pressing issue from Pearl Harbor on was the matter of ITT
amalgamating the telephone companies of Mexico. One of these,
Mexican Telephone and Telegraph, was owned by Behn outright.
The other was owned by the Ericsson Company, of which Behn had
a 35 percent share in Sweden. The Ericsson Company was partly
owned by Nazi collaborator Axel Wenner-Gren and by Jacob Wal¬
lenberg, Swedish millionaire head of the ball bearings firm, which
played both sides of the war. Behn was in and out of Europe in the
early 1940s discussing a merger of the two Mexican companies
under his guidance.

122

TRADING WITH THE ENEMY

He made the reason for the take-over the need to remove Axis
influence in Mexico—though he failed to explain how ITT could
in any way reduce such influence. Indeed, it would almost certainly
have enhanced it. C. J. Durr, acting chairman of the Federal Com¬
munications Commission, was drastically opposed to any such
takeover, Durr was correctly worried that some $15 million of
money that would be advanced to Behn by the Export-Import Bank
would make its way directly into German hands.

Durr was also concerned over the fact that ITT retained a con¬
tract with the Nippon Electric Company in Japan that provided that
Behn could place Japanese employees in Mexico in time of war.

On October 29, 1942, the Export-Import Bank agreed to pay $36
million for the merger. When Durr asked point-blank why this was
the case, Hugh Knowlton said, “The ITT will supply a listening
post.” Durr replied, “Isn’t that a two-way affair?” Commander Wil-
limbucher of the U.S. Navy said, “The question of which side gets
most value from the listening post depends on the relative shrewd¬
ness of the particular people in the company.” “Who gets the infor¬
mation?” Laurence Smith of the Department of Justice asked. “The
company,” Francis DeWolf of the State Department said. “The
Government gets what the company wants it to. * The company has
to be careful lest competitive information gets into the hands of the
Government and then reaches its competitors.”

Statements of this kind infuriated Durr. He was aggravated also
by the fact that all the circuits to the Axis remained open through¬
out the war. The real truth of the matter emerged at a meeting on
January 6, 1943. There was an argument between Durr and Hugh
Knowlton of the board. Knowlton said that “The army has investi¬
gated ITT thoroughly and ... ITT is presently engaged in confiden¬
tial manufacturing work for the army so I assume they’re all right.”
Durr stated he wasn’t so much worried about their operations in
the United States “as they could be watched, but rather their opera¬
tions outside this country and particularly their Axis connection.”
Knowlton kept up his defense. So did DeWolf, who said, “It might
be well to put a finger on just what the Committee is afraid of. ITT
has factories in Germany, it has a company in Spain, it is in corre¬
spondence with Belgium, in fact, it is in correspondence with the

♦Author's italics.

THE TELEPHONE PLOT

123

enemy. What this Committee is afraid of is public opinion. . .. That
the corporation might not play our game. ”*

Knowlton said he had never heard anyone express any doubt as
to Colonel Behn’s patriotism. (“Col. Behn certainly knows his way
around but he is a loyal American citizen.”) Laurence Smith (of
Justice) said he had not yet had from the U.S. Commercial Com¬
pany “an adequate appraisal of possible dangers.” He mentioned
Westrick and Nazi cooperation in South America and DeWolf an¬
swered, “ITT is a loyal American corporation.” Smith disagreed.
Lawrence Knapp of Justice asked if the Tokyo circuit was still oper¬
ating. Knowlton said, “Not if the U.S. Government asked them not
to.” DeWolf said, correctly, “If they are doing it, it is with the li¬
cense of the State Department!”

While these meetings were gong on, CIDRA, ITTs Argentine
subsidiary, handled a constant flow of phone calls to Buenos Aires,
Germany, Hungary, and Rumania. Another ITT subsidiary, the
United River Plate Telephone Company, handled 622 telephone
calls between the Argentine and Berlin in the first seven months of
1942 alone.

There was constant dealing with Proclaimed List firms. Licenses
were issued by authorization of the local embassies. At Behn’s in¬
structions Brazil and Peru were supervised from Argentina since
Argentina had not declared war on the Axis.

In Brazil the ITT obtained a license from the embassy to buy
equipment from a leading German-owned Proclaimed List electri¬
cal company, Industria Electre-Ace Plangt, which supplied tung¬
sten and cobalt to ITT. The mailing lists of ITT were filled with
enemy names. In Venezuela, in June 1942, ITT bought many con¬
signments of radio tubes from the firm Armanda Capriles and Co.,
which was contributing heavily to the Nazi Winter Help Fund, de¬
signed to pay for Germany’s troops in Russia and Poland. In Uru¬
guay, Behn’s manager was himself on the Proclaimed List.

By the second half of 1942, ITT sent telephone apparatus to its
offices in South America without licenses. Discounts were permitted
and the Export-Import Bank loan continued. In July 1942 the ITT
All-America Cables Office in Buenos Aires obtained secret informa-

* Author’s italics.

124

TRADING WITH THE ENEMY

tion on tungsten ore through handling cables and passed this on to
the enemy-controlled Havero Trading Company of Buenos Aires.

On December 4, 1943, P. E. Erickson of the ITT subsidiary in
Sweden wrote to H. M. Pease of the head office in New York con¬
sulting with him on a 400 million kroner plan to automatize the
telephone system in Nazi-occupied Denmark. The Danish ITT sub¬
sidiary employed two hundred people in its Copenhagen factory.
It was of vital importance to the Germans in its North European
network of communications.

In South America, Sosthenes Behn was in partnership (as well
as rivalry) with an even more powerful organism: the giant Radio
Corporation of America, which owned the NBC radio network.
RCA was in partnership before and after Pearl Harbor with British
Cable and Wireless; with Telefunken, the Nazi company; with Sal¬
eable, wholly owned by the Mussolini government; and with Vichy’s
Compagnie Generate, in an organization known as the Transradio
Consortium, with General Robert C. Davis, head of the New York
Chapter of the American Red Cross, as its chairman. In turn, RCA,
British Cable and Wireless, and the German and Italian companies
had a share with ITT in TTP (Telegrafica y Telfonica del Plata),
an Axis-controlled company providing telegraph and telephone ser¬
vice between Buenos Aires and Montevideo. Nazis in Montevideo
could telephone Buenos Aires through TTP without coming under
the control of either the state-owned system in Uruguay or the ITT
system in Argentina.

Messages, often dangerous to American security, were transmit¬
ted directly to Berlin and Rome by Transradio. Another share¬
holder was ITT’s German “rival,” Siemens, which linked cables and
networks with Behn south of Panama.

The head of RCA during World War II was Colonel David Sam-
off, a stocky, square-set, determined man with a slow, subdued
voice, who came from Russia as an immigrant at the turn of the
century and began as a newspaper seller, messenger boy, and Mar¬
coni Wireless operator. He became world famous in 1912, at the
age of twenty-one, as the young telegraph operator who first picked
up word of the sinking of the Titanic : for seventy-two hours he con¬
ducted ships to the stricken vessel. He rose rapidly in the Marconi
company, from inspector to commercial manager in 1917. He be-

THE TELEPHONE PLOT

125

came general manager of RCA in 1922 at the age of thirty-one and
president just before he was 40. Under his inspired organization
NBC inaugurated network broadcasting and RCA and NBC be¬
came one of the most colossal of the American multinational corpo¬
rations, pioneers in television and telecommunications.

After Pearl Harbor, Samoff cabled Roosevelt, “All of our facili¬
ties and personnel are ready and at your instant service. We await
your command.” Sarnoff played a crucial role, as crucial as Behn’s,
in the U.S. war effort, and, like Behn, he was given a colonelcy in
the U.S. Signal Corps. He solved complex problems, dealt with a
maze of difficult requirements by the twelve million members of the
U.S. armed forces, and coordinated details related to the Normandy
landings. He prepared the whole printed and electronic
press-coverage of V-J day? in London in 1944, with headquarters
at Claridge’s Hotel, he was Eisenhower’s inspired consultant and
earned the Medal of Merit for his help in the occupation of Europe.

Opening in 1943 with a chorus of praise from various generals,
the new RCA laboratories had proved to be indispensable in time
of war.

But the public, which thought of Samoff as a pillar of patriotism,
would have been astonished to learn of his partnership with the
enemy through Transradio and TTP. The British public, belea¬
guered and bombed, would have been equally shocked to learn that
British Cable and Wireless, 10 percent owned by the British govern¬
ment, and under virtual government control in wartime, was in fact
also in partnership with the Germans and Italians through the same
companies and proxies.

Immediately after Pearl Harbor, Hans Blume, manager of Trans¬
radio in Chile, set up an arrangement in connection with his related
clandestine station, PYL, to transmit Nazi propaganda, coordinate
espionage routes, give ship arrivals and departures, supply informa¬
tion on U.S. military aid, U.S. exports, the Latin American defense
measures, and set up communications with German embassies
throughout South America. Transradio was equally active in Rio
and Buenos Aires.

In Brazil, Transradio was known as Radiobras, its mixed Ameri¬
can, British, Nazi, and Italian shares permanently deposited in—of
course—the National City Bank of New York in Rio. Its directors
were American, Italian, German, and French. Transradio’s London

126

TRADING WITH THE ENEMY

bank transferred as much as a quarter of a million shares of Transra¬
dio stock from Nazi-controlled banks to the National City Bank
branch in 1942.

In Argentina the board was again a mixture of Nazi, Italian, and
Allied members. Like the members of the Bank for International
Settlements, though with even less excuse, the directors sat around
a table discussing the future of Fascist alliances. So extreme was
the situation that many messages could not be sent to Allied capitals
by U.S. embassies or consulates without going through Axis hands
first.

On March 15, 1942, Transradio in London instructed its Buenos
Aires branch to open a radio-photograph circuit to Tokyo. Since
British post office authorities were in charge of British Cable and
Wireless’s wartime operations, the British government was pre¬
sumed to have authorized this act. On March 16 the U.S. Embassy
in Buenos Aires reported to the State Department in Washington
that the opening of the radio-photograph circuit “would appear to
offer the Japanese opportunity of transmitting news photos unfavor¬
able to the united nations to Buenos Aires for distribution here and
in other countries.”

On March 16, Thomas Burke of the State Department sent a note
to State’s Breckinridge Long saying, over three months after Pearl
Harbor, “Now that we are at war and parties to Resolution XL of
the Rio Conference, it seems proper to require our companies to
desist from carrying any Axis traffic in the other American repub¬
lics. It is our understanding in this connection that the Treasury
Department in the future will require licenses of American commu¬
nications companies desiring to carry traffic of this nature. ... As
far as the past is concerned, it is believed that we can give oral assur¬
ances to the companies that they will not be prosecuted against.”
It is of interest to note that those assurances extended into the future
and that indeed the companies were not prosecuted against at any
time.

At the same time, London allegedly authorized Transradio to
transmit messages from South American capitals direct to Rome.
The British authorities had cut off Italcable’s line to Rome at Gi¬
braltar in 1939, but Transradio now took over its Italian partner’s
transmission at a 50 percent discount.

Simultaneously, the Transradio stations, according to State De-

THE TELEPHONE PLOT

127

partment reports with the full knowledge of David Sam off, kept up
a direct line to Berlin. The amount of intelligence passed along the
lines can scarcely be calculated. The London office was in constant
touch with New York throughout the war, sifting through reports
from Argentina, Brazil, and Chile and sending company reports to
the Italian and German interests.

In a remarkable example of the pot calling the kettle black,
Nando Behn, the nephew of Sosthenes Behn, cabled his uncle from
Buenos Aires to New York on June 29,1942: “It is about time some¬
thing is done down here to cut out the sole communication center
in the Americas with Berlin. Our competitors, Transradio, have a
direct radio circuit with Berlin and you can be pretty sure that every
sailing from Buenos Aires is in Berlin before the ship is out of sight.*'

General Robert C. Davis never seemed to question the fact that
his Swedish fellow board members were proxies of an enemy gov¬
ernment. Nor that secret documents, charts, and patents were being
transferred with speed, accuracy, and secrecy, with the authoriza¬
tion of the Japanese Minister of Communications, to South America
direct.

On July 10, 1942, adhering to terms of the Rio Conference at
which Sumner Welles had succeeded in obtaining agreements for
discontinuing communications with the Axis, the Argentine Minis¬
ter of the Interior addressed an official letter to the Director General
of Posts and Telegraphs, seeking to suspend such connections for
the duration. Despite that fact. Transradio and RCA, like their
counterparts in ITT, pretended they feared that if they did not dis¬
continue the circuits, the Argentine government would retaliate by
nationalizing them.

By blaming the Argentine, Chilean, and Brazilian cabinets, Sam-
off and his own board proved conclusively that they were interested
in business as usual in wartime.

On July 12, two days after Argentina’s intention to disconnect
the circuits was made clear, an urgent meeting was held in the office
of Breckinridge Long, Assistant Secretary of State in charge of com¬
munications and visas, and a former ambassador to Italy, admirer
of Mussolini, and notorious block to Jewish refugee immigration.
Among those present were Samoff, Sir Campbell Stuart, New York
representative of British Cable and Wireless, RCA vice-president
W. A. Winterbottom, and General Davis. It was graciously decided

128

TRADING WITH THE ENEMY

that Davis should go to Argentina and Chile and ‘‘have a look see.”
The ostensible purpose of Davis’s mission was to do everything in
his power to close down the circuits. He would travel with an engi¬
neer, Phillip Siling, of the FCC (and ITT) and Commander George
Schecklin of the Office of War Information (and RCA).

At a further meeting on July 20, setting out details of the mission,
Breckinridge Long calmly referred to the importance of the ques¬
tion, pointing out without anger the unfortunate fact that “a stream
of information is being sent out by the consortium stations with re¬
sulting losses in our shipping.” Sir Campbell Stuart of British Cable
and Wireless coolly promised to keep his government “advised of
the decision of this meeting.” It was agreed that the State Depart¬
ment would take care of all costs of Davis’s mission and arrange
the necessary priorities in terms of passports and visas.

Davis traveled to the South American cities and began interview¬
ing the local directors and chiefs of staff. He either was completely
blind to the facts, or lied to cover his associates. Despite the fact
that every branch of Transradio was bristling with Nazis, he dis¬
lodged only two: Henri Pincemin, the Vichy manager in Buenos
Aires, and Hans Blume in Valparaiso. Ernesto Aguirre, president
of the board of directors of Transradio in Buenos Aires, was kept
on despite the fact that he was also on the board of the Nazi branch
of General Electric as well as of Italian, Japanese, and German com¬
panies.

In Buenos Aires, Rio, and other cities, Davis retained important
Nazis. One of these, Jorge Richter, an official of Siemens who moved
from branch to branch, was reported by the FBI to be an espionage
agent of the Nazi High Command.

On August 18, 1942, Davis cabled Long from Santiago, Chile,
stating that he could give Transradio there “a clean bill of health,”
and that the company was “entirely under Allied control.” Yet in
January 1943 the FBI was to supply its own report based on an inde¬
pendent investigation saying that Transradio there still had four re¬
ceivers tuned in to Tokyo, Berlin, London, and New York and that
Hans Blume’s brother, Kurt, was now in charge. Similar reports
reached Washington on Buenos Aires and Rio.

On August 25, 1942, Davis, Samoff, Winterbottom, and Breckin¬
ridge Long met in Long’s office to hear General Davis give RCA
a complete whitewash in South America. He said, “There is a satis-

THE TELEPHONE PLOT

129

factory condition now existing. . . . The communication facilities
of Transradio ... are in friendly hands.” Friendly to whom? one
might ask; but Long conveyed to Cordell Hull his own satisfaction
with the situation, even confirming such an outrageous statement
as, “Dr. Aguirre is entirely pro-Ally and cooperative.”

On August 31, Davis presented his report to an understandably
delighted RCA shareholders* meeting. He read messages that the
State Department had conveyed to the Italian and German proxies
in the middle of the war. The French and Germans urged Davis
via the board not to make any further changes in South America.
None was made except that an American, George W. Hayes, took
over in Buenos Aires. He found himself as managing director of a
mixed Axis and Allied board. He also allegedly did not enforce the
suggestion that Aguirre resign from his Nazi companies—until Oc¬
tober 6, 1943.

Despite pretensions to the contrary, and promises to close down
the circuits, they continued. Breckinridge Long proved incapable
of vigorously enforcing the disconnections or unwilling to do so.
The British government seemed to be prepared to let the matter drift
on indefinitely. Whenever it was suggested by Long that the British
should disconnect, Sir Campbell Stuart indicated he was waiting
for the Americans to act. Samoff waited for Stuart and Sosthenes
Behn for Samoff. The buck was passed to South American govern¬
ments, from London to New York and back again, while the profits
and the espionage continued.

The U.S. Commercial Company sat on the matter on September
25, 1942, as part of the FCC special board in charge of hemispheric
communications. Hugh Knowlton reported that RCA had in¬
structed Transradio in Argentina and Chile to close the circuits of
the Axis “when the British did so.” The British ambassador in
Washington had advised FCC Acting Chairman C. J. Durr “that
the British government expects daily to be able to report that the
British representatives in these two companies have been so in¬
structed.” ITT “would also close their circuits when the British
did.*’

By October 1942 the matter was still dragging on. At a meeting
at the State Department on October 7, Samoff took the view that
he would “generously waive consideration” of the commercial in¬
terests at stake. Such “generosity” was surely mandatory in war-

130

TRADING WITH THE ENEMY

time. Ignoring the fact that the British directors had said that it was
up to him to discontinue the South American circuits if he wanted
to, and that much of South America had turned against the Axis,
he repeated that the British directors had still to concur in the ac¬
tion, and he questioned whether the order to close would be obeyed
by the local managements in each case—ignoring the fact that he
had the power through Davis to fire anybody who disobeyed such
orders.

By February 1943, Transradio was still in business. On February
10, RCA’s W. A. Winterbottom cabled Martin Hallauer of British
Cable and Wireless in London that he was making sure that RCA
received all dividends and interests of Transradio, supervised all ac¬
counts, and helped maintain its offices in London. Even as the war
deepened, RCA and British Cable and Wireless continued to own
a substantial proportion of Transradio’s stocks. In Brazil in March
1943, seven months after Brazil was at war with Germany, RCA’s
Radiobras held 70,659 German shares: part of the 240,000 voting
shares held by the National City Bank of New York in Rio. On
March 22 a British Cable and Wireless executive wrote from Lon¬
don to State that the Swedes, who represented the Nazi interests,
had received the minutes of the latest board meeting and had sent
them to Berlin and Paris.

On May 24, 1943, Long called Samoff with a mild complaint
“that we have reason to believe that more messages than the agreed
700 code groups a week are being sent from Buenos Aires by the
Axis powers for their Governments.” Long added, “There may be
sound reasons why your man George W. Hayes refuses to disclose
the exact number of messages sent in code groups by each of the
Axis representatives to their Governments. But I don’t see any rea¬
son why Hayes shouldn’t ask for a report on all code groups being
sent day by day and to include a report on all belligerents. If you
would obtain the information we would be appreciative. Don’t do
it by telegraph or telephone. We’ll make our diplomatic pouch avail¬
able to you.” Samoff replied, “I’ll talk to Winterbottom. I don’t see
why we shouldn’t do it.” The documents do not show that he did.

As it turned out, the final disconnection of the circuits only took
place because the South American governments willed it. There is
no evidence that ultimate action was taken by the State Department,
RCA, or British Cable and Wireless.

THE TELEPHONE PLOT

131

Sosthenes Behn, like Samoff, paradoxically showed great dedica¬
tion to the American war effort. On May 15, 1942, Behn announced
to The New York Times that the United States government could
have free use of all ITT patents and those of its subsidiaries, both
in the United States and abroad, for the duration of the war and
six months thereafter. He would not charge manufacturers engaged
in the production of war equipment.

With a touch of black humor he told the Times that “We have
9,200 patents and more than 450 trademarks in 61 countries, and
about 5,100 patents and 40 trademark applications pending in 38
countries. These figures do not include patents to German subsidiar¬
ies of the corporation since information about them is not avail¬
able.” This barefaced lie was published without demur in the Times,
Behn coolly announced that profits and losses of his international
corporations “and the accounts of German subsidiaries, Spanish
subsidiaries, the Shanghai telephone company ... and Mexican sub¬
sidiaries” had not been included in the annual financial statements
for the same reason of “lack of information”—information that was,
in fact, reaching them daily.

Amazingly, on April 21, 1943, Behn let the cat at least peep out
of the bag. He said, at an ITT shareholders’ meeting in New York,
“More than 61 percent of ITT’s operations are in the Western hemi¬
sphere, almost 24 percent in the British Empire and neutral nations
in Europe and less than 13 percent in Axis or Axis-controlled coun¬
tries. Most of the cash available to the corporation originated with
‘subsidiaries in the Western hemisphere.’ ”

The announcement to the shareholders that 13 percent of ITT
was held in enemy territory caused not a ripple of surprise.

Despite the fact that all branches of American Intelligence were
monitoring Colonel Behn at every turn, intercepting his messages,
supplying unflattering memoranda marked “Confidential,” and in
general knowing exactly what he was up to, nothing whatsoever was
done to stop him. As the war neared its end, whatever mild internal
criticisms were voiced within the American government were
quickly silenced by the prospects of peace with Germany and future
plans to confront Russia. The FBI released through its internal or¬
ganization a number of detailed reports on Behn forwarded to
Navy, Army, and Air Force Intelligence. J. Edgar Hoover linked
Behn to Nazi sources, including agents in Cuba and other parts of

132

TRADING WITH THE ENEMY

the Caribbean. Yet, despite the overwhelming evidence of Behn’s
collusion in his files, Hoover was pleased to receive from Behn the
book Beyond Our Shores the World Shall Know Us, , written with
Behn’s cooperation in 1944 and dealing with the problem of provid¬
ing adequate American international broadcasting facilities. On
June 17 of that year Hoover wrote to Behn: “Your letter of June
10 . . . has been received and the book entitled Beyond Our Shores
the World Shall Know Us has arrived. I do want to express to you
my heartfelt appreciation for your thoughtfulness in making this
splendid volume available.”

Ironically, Behn’s wartime headaches came not from Roosevelt
but from Hitler. During that last period of the war Behn’s work
on behalf of the German army had deeply intensified. His communi¬
cations systems for the OKW, the High Command of the Nazi
armed forces, had become more and more sophisticated. The sys¬
tems enabled the Nazis under Schellenberg’s special decoding
branch to break the American diplomatic code. They also allowed
the building of intercept posts and platoons in the defensive cam¬
paign against the British and American invasion of France. At the
same time, Behn was indispensable in making that invasion possible.

The problem was that the forces of anti-Behn were moving in
under Postminister Wilhelm Ohnesorge. Behn’s associate, General
Erich Fellgiebel of the OKW, was prodded by the determination
to bring about a negotiated peace, and Schellenberg’s efforts un¬
doubtedly abetted him. With Behn moving behind the scenes, and
the assistance of John Foster Dulles’s brother, Allen Dulles, of the
Schroder Bank and the OSS, the famous generals’ plot of July 1944
was hatched to assassinate Hitler. When Fellgiebel hesitated in cut¬
ting off communications to Hitler’s headquarters after the bomb
went off that almost killed the Fiihrer, conversations were overhead
by Hitler’s spies that revealed the plot’s purpose. Ohnesorge’s hour
had arrived. In a desperate effort to save himself from ruin or worse,
Schellenberg turned against his fellow conspirators and Himm¬
ler—who had all along tacitly half-encouraged Behn and the plot¬
ters—was compelled to feed Fellgiebel to the wolves. Fellgiebel and
his associate in ITT General Thiele were executed, and Karl Linde-
mann of Standard Oil went to prison, narrowly escaping the gal¬
lows. Only ITT’s Gerhardt Westrick’s hold over his fellow ITT
board member Schellenberg and close contacts with I.G. Farben

THE TELEPHONE PLOT

133

saved Westrick from a similar fate. Again, Behn’s German empire
very nearly was confiscated by Postminister Wilhelm Ohnesorge,
but Schellenberg took a great risk and protected it once more.

On the day Paris was liberated, August 25, 1944, Behn drove in
a jeep down the Champs-felysees in a new role: He was “special
communications expert for the Army of Occupation.” His
right-hand man, Kenneth Stockton, who had remained joint chair¬
man with Westrick of the Nazi company throughout the war, was
with him in the uniform of a three-star brigadier general. Behn
made sure in Paris that his collaborating staff were not punished
by Charles de Gaulle and the Free French. He was helped at high
army levels to protect his friends.

When Germany fell, Stockton, with Behn, commandeered ur¬
gently needed trucks to travel into the Russian zone, remove ma¬
chinery from ITT-owned works and aircraft plants—and move
them into the American zone.

In 1945 a special Senate committee was set up on the subject of
international communications. Completely unnoticed in the press.
Burton K. Wheeler, “reformed” now that Germany had lost the
war, became chairman. An immense dossier showing the extraordi¬
nary co-ownership with German and Japanese companies of RCA
and ITT was actually published as an appendix to the hearings, but
almost nobody took note of this formidable and fascinating
half-million-word transcript. Least of all were its contents noted by
the committee itself, which wasted the public’s money by simply
discussing for days (with Fraternity figures like James V, Forrestal)
the possibility, quickly ruled out, of centralizing American commu¬
nications systems. There was not a mention from beginning to end
of the discussion of the questionable activities of RCA and ITT
chiefs. Yet, in a curious series of exchanges between Wheeler and
Rear Admiral Joseph R. Redman, who had been in charge of Naval
Communications during the early part of the war, the cat leaped
out of the bag in no uncertain manner. Apparently under the im¬
pression that the hearings would never be published, Wheeler seri¬
ously sat and talked of some of the reasons that such events had
taken place. He asked Redman the question, already knowing the
answer, “To what extent has American ownership of communica¬
tions manufacturing companies in foreign countries, such as Ger¬
many, Sweden, and Spain, been of advantage, if any, to this coun-

134

TRADING WITH THE ENEMY

try?” Redman replied, “Of course, from an economic point of view,
I am not qualified to say, but I would say this from possibly a techni¬
cal or research point of view, you get a cross-exchange of informa¬
tion in the research laboratories.”

This amazing revelation by a high personage won the response
from Wheeler, “And what about the disadvantages to us?” Redman
replied blandly, “While you are working on things here that are de¬
veloped for military reasons, there may be a certain amount of leak¬
age back to foreign fields.”

Wheeler asked, “How could you keep a manufacturing plant in
Germany or in Spain or in Sweden, even though controlled by West¬
ern Electric, from exchanging information as to what they were
doing?”

Redman replied, “Well, we have had to rely a great deal upon
the integrity of our commercial activities. Of course, if a man is a
crook, he is going to be a crook regardless of whether you set up
restrictions or not.”

Wheeler said, “Let us suppose that you have a manufacturing
company in Germany and also one here, and they are owned by
the same company, aren’t they exchanging information with refer¬
ence to patents and everything else? .. . Admiral Redman, you are
not naive enough to believe, if a company has an establishment in
Germany and another in America, they are not both working to
improve their patents, are they?”

Redman admitted, “No, sir.”

Warming to his theme, Wheeler said, “Consequently, if there are
private companies that have factories over there and also here,
they’re bound to exchange information. It seems to me this has been
going on in all kinds of industry. And that would be true of the elec¬
tronics industry, or any other manufacturing industry, and whether
they have a medium for such exchange in the nature of cartels or
something else, they exchange information. What check has the
Navy made to find out whether or not information is exchanged
in that manner?”

Redman said, “We get a certain amount of information from cap¬
tured equipment, captured documents, and things like that, and can
find out if there is a leakage.... Of course we have depended some¬
what on our foreign attaches to get us some information on these

THE TELEPHONE PLOT

135

things.... I do not like here to get into a discussion of intelligence
because I fear we might get ourselves into trouble.”

Wheeler said, “You might, but some of us don’t feel that way
about it.”

“Perhaps not,” Redman replied.

Wheeler continued, “We might get into trouble in the Senate, but
they cannot do anything about it. They cannot chop our heads off
at the moment.”

Senator Homer Capehart added, “For at least six years.”

On February 16, 1946, Major General Harry C. Ingles, Chief Sig¬
nal Officer of the U.S. Army, acting on behalf of President Truman,
presented the Medal of Merit, the nation’s highest award to a civil¬
ian, to Behn at 67 Broad StreeCNew York. As he pinned the medal
on Colonel Behn, Ingles said, “You are honored for exceptionally
meritorious conduct in the performance of outstanding service to
the United States.” A few years later Behn received millions of dol¬
lars in compensation for war damage to his German plants in 1944.
Westrick had obtained an equivalent amount from the Nazi govern¬
ment.

Globes of Steel

Throughout World War II, Sosthenes Behn was an investor in the
Swedish Enskilda Bank, chief financier of the colossal ball-bearings
trust known as SKF. Goring’s cousin Hugo von Rosen and William
L. Batt, vice-chairman of the War Production Board, were directors
of SKF in America throughout the war, dedicated to keeping South
American companies on the Proclaimed List supplied with ball
bearings.

Tiny ball bearings were essential to the Nazis: The Luftwaffe
could not fly without them, the tanks and armored cars could not
roll in their missions of death. ITT’s Focke-Wulfs, Ford’s autos and
trucks for the enemy, would have been powerless without them. In¬
deed, World War II could not have been fought without them.
Focke-Wulfs used at least four thousand bearings per plane: roughly
equivalent to those used by the Flying Fortresses. Guns, bomb-
sights, electrical generators and engines, ventilating systems,
U-boats, railroads, mining machinery, ITT’s communications de¬
vices—these existed on ball bearings.

With its 185 sales organizations throughout the world, SKF
could have contributed a fine example of Sweden’s economic de¬
mocracy at work. However, SKF was concerned only to make prof¬
its, trade on both sides of the fence in wartime, and act as a front
for German interests. It was in part an arm of the Swedish govern¬
ment since its representatives abroad were often ambassadors, min¬
isters, or consuls, who represented Swedish policy all over the
world. SKF represented virtually every industrial combine in Swe¬
den and every member of the board was part of the companies that
controlled the entire Swedish economy. Founded in 1907, SKF,
with its subsidiaries, was the largest manufacturer of bearings on
earth. It controlled 80 percent of bearings in Europe alone. It also
controlled iron ore mines, steel and blast furnaces, foundries and
factories and plants in the United States, Great Britain, France, and
Germany. The largest share of its production until late in World

137

138

TRADING WITH THE ENEMY

War II was allocated to Germany: 60 percent of the worldwide pro¬
duction of SKF was dedicated to the Germans. Some indication of
SKF’s attitude toward the Allies can be gauged from the fact that
while the German factory at Schweinfurt produced 93 percent of
capacity, the U.S. company in Philadelphia produced less than 38
percent, and the British less than that.

And ball bearings were among the most powerful weapons of The
Fraternity’s sophisticated form of wartime neutrality. Their inves¬
tor and the power behind their production and distribution as SKF
chairman was Sven Wingquist, a dashing playboy friend of Goring
and the Duke and Duchess of Windsor. He was a prominent partner
in Jacob Wallenberg’s Stockholm Enskilda, the largest private bank
in Sweden—a correspondent bank of Hitler’s Reichsbank. Wallen¬
berg was large, athletic, impeccably Aryan—comptroller of mining,
shale oil, electrical goods, munitions, iron mines—virtually the
whole industrial economy of his native country. Sosthenes Behn and
Wingquist were in partnership with Axel Wenner-Gren of U.S.
Electrolux in the gigantic Bofors munitions empire: Bofors supplied
Germany with a substantial part of its steel production in World
War II.

As stated, American directors for the duration were Goring’s sec¬
ond cousin by marriage Hugo von Rosen, and William L. Batt. A
hard-bitten and driving individualist, Batt was born in Indiana; he
began in railway shops, where he learned a machinist’s trade from
his father. He earned his engineering degree at Purdue in 1907; next
year he was employed in the ball-bearing plant of Hess-Bright Man¬
ufacturing Co. of Philadelphia. When Hess-Bright amalgamated
with SKF in 1919, he rose rapidly to become president of the com¬
pany in 1923.

A big man, with the hands of a lumbeijack, black patent-leather
hair, a prominent nose and a jutting cleft chin, Batt dressed in high
fashion, and sported monogrammed silk handkerchiefs and Sulka
ties. His SKF factory in Philadelphia rivaled the giant sister facto¬
ries in Goteborg in Sweden and Schweinfurt in Germany. SKF Phil¬
adelphia was the subject of glowing articles in The Wall Street Jour¬
nal and Fortune magazine, its products reaching a staggering $21
million a year by 1940.

With war approaching, and the fear of America entering the con¬
flict, Hugo von Rosen and fellow board members traveled to their

GLOBES OF STEEL

139

German and Italian plants, which were jointly owned with Ger¬
many and Italy, and promised their managers that if it proved diffi¬
cult to ship ball bearings to Nazi or Italian affiliates in Latin Amer¬
ica through the British blockade, Philadelphia would take over
whether or not Roosevelt declared war. Simultaneously, the SKF
directors protected their associated chemical company, I.G. Far-
ben’s Bosch, with the aid of John Foster Dulles. Batt was president
of American Bosch. Dulies, the Bosch/General Aniline and Film
attorney, set up a voting trust to protect the company with himself
and Batt as trustees after Pearl Harbor. He was thus enabled to save
the company from being seized until the spring of 1942, five months
after America was at war.

Dulles also proved helpful in setting up similar protections for
SKF: protections that lasted until the end of the war. He helped
organize a deal whereby Batt became the nominal majority share¬
holder with trustee voting rights. Since American-owned companies
could not be seized by Alien Property Custodian Leo T. Crowley,
this proved to be a protection.

With the outbreak of war, Roosevelt appointed Batt
vice-chairman of the War Production Board, whose chairman was
Sears, Roebuck’s Donald Nelson. Batt worked from 8 a.m. until
after midnight, so busy that his lunch consisted of apples and milk
eaten in the middle of meetings while he kept relighting his cold
pipe with a lighter in the form of a cannon.

From the moment he took up his position on the War Production
Board, Batt instituted the famous motto “Patch and pray.” Ignor¬
ing the fact that his fellow Fraternity members had caused these
very shortages, and that he was wartime majority trustee share¬
holder for companies collaborating with the enemy, he blasted the
public on the radio for being extravagant with rubber and scrap
metal. He insisted that housewives turn in their tin cans, old tires,
tubes, leaky hot water bottles, rubber gloves, and aprons. He called
for all old newspapers to be sent for packing ammunition; he en¬
forced voluntary surrender of rags, used wool, and even fats for
glycerin. At the same time, he cheerfully overlooked the fact that
scrap had gone to build the bombs that were rained on Pearl Har¬
bor. He moved smoothly between that whited sepulcher of Republi¬
canism, the Union League Club of Philadelphia, and the New Deal¬
ers on Capital Hill. He was smart enough to express admiration of

140

TRADING WITH THE ENEMY

the Red Army when he went to Russia on the fam<5us Averell Ham-
man mission. It was convenient for him to be called a “pink” while
maintaining his Nazi connections.

During his period with the War Production Board, which lasted
for the duration, Batt’s behavior was largely in the interests of The
Fraternity. He was ideally situated to turn a blind eye to von
Rosen’s trade with Proclaimed Listees, given his immense influence
and the fact that he had innumerable government employees on his
staff throughout North and South America and neutral Europe. Be¬
cause of war and the blockade, it was difficult for SKF in Sweden
to supply its Proclaimed List customers south of the Panama Canal.
As a result, von Rosen saw to it that those same companies were
supplied direct from Philadelphia.

Von Rosen was under direct orders from Stockholm to supply
the Latin American Nazi-associated firms irrespective of the fact
that there was an overwhelming demand for all available ball bear¬
ings in the United States. He was to base his sales on the principle
of Business as Usual rather than on the needs of the war effort. Batt,
accepting these arrangements, could not use the excuse that he was
in effect working for a Swedish company and therefore had to obey
neutral rules, since he himself as an American owned 103,439 shares
of capital stock.

Under von Rosen’s directorship and Batt’s trusteeship, SKF pro¬
duction in wartime failed to reach even the minimum of American
expectations. This fact infuriated Morgenthau, who designated the
stocky, feisty Canadian-born Lauchlin Currie of the White House
Economics Staff to hammer away at the government to stop this
outrageous circumstance. Currie was seconded by a very deter¬
mined and thorough official of French extraction, Jean Pajus of the
Office of Economic Programs, who prepared millions of words in
reports on the doings of Batt and von Rosen until as late as 1945.

Delving deep into records, Currie found that the all-important
Curtiss-Wright Aviation Corporation was unable for fifteen months
after Pearl Harbor to secure sufficient ball bearings from SKF and
came close to closing down. Worn-out ball bearings caused crashes
that cost American lives. At a time when every plane in the country
was desperately needed for the war effort, large numbers of planes
were grounded because of the lag in supply.

In June 1943, one loyal, patriotic executive of SKF finally lost

GLOBES OF STEEL

141

all patience with von Rosen and went to Washington to see Batt
in his role of vice-chairman of the War Production Board to com¬
plain bitterly of the SKF shortages that were hampering America’s
fight in the air. Batt listened coldly and then said, “Nothing can
be done. Nor will it be done.” That was the end of the matter. The
executive resigned.*

Someone on the SKF staff even doctored the inventories in Phila¬
delphia so that it seemed only a few million ball bearings were
ground out, when in fact vastly more had been produced. Some¬
times, for American use, von Rosen manufactured an outer bearing
part without its inner component and vice versa. It exasperated Cur¬
rie and Pajus that the incomplete bearings were useless.

While holding up orders, causing bottlenecks (with the collusion
of the indispensable Jesse H. Jones), and causing shortages, von
Rosen did not only ship to South America. He also sent to Sweden
secret patents, detailed charts, and private production details.
Knowing that these might be intercepted by British or American
censorship in Bermuda, members of his stafT placed the precious
documents in the diplomatic bags of the Swedish embassy in Wash¬
ington. Neutral diplomatic bags were precluded from seizure or
search in time of war. Currie wrote, in a memorandum summing
up Batt’s collusion, on May 3, 1944: “Batt was busy . . . pulling
all wires he could in the U.S. Office of Censorship and with the Brit¬
ish Purchasing Commission.”

At the same time these activities were continuing, the SKF
Philadelphia operation was issued a general license to deal interna¬
tionally throughout the war. And Batt’s retention in his official posi¬
tion during World War II can only be ascribed to Roosevelt.

Treasury even allowed SKF to get away with posing as an Ameri¬
can-owned corporation, despite the fact that Treasury had records
of the Swedish-German ownership in its possession. When Lauchlin
Currie became too inquisitive, Batt deliberately burned all of the
appropriate SKF correspondence and accountancy files.

On April 10, 1943, a loyal and patriotic American, J. S. Tawresey,
chief engineer on the SKF board of directors, resigned following
a furious quarrel with Batt. He charged that SKF was “destructive
to the war effort,” that SKF had failed to meet orders for 150,000

•Name not given in government reports.

142

TRADING WITH THE ENEMY

deliveries per month to the all-important Pratt-Whitney fighter air¬
plane engine company, and that Batt was flagrantly working against
America despite his WPB role. In disgust with the company, Ta-
wresey joined the Air Corps. He contacted Treasury. Franklin S.
Judson of the Foreign Economic Administration flew to see him
at an Air Force base in Florida. The men had a charged meeting
in which Tawresey poured out his heart on the doings of SKF. An¬
grily he charged von Rosen and many of his staff with anti-Semitism
and pro-Nazi feelings, and said that they blatantly held the United
States up to scorn at board meetings and in private conversations.
Currie was horrified. He wrote Morgenthau a blistering report on
the meeting, followed by an equally damning SEC report, but noth¬
ing happened to the company as a result.

Throughout the war an old reliable of The Fraternity proved to
be helpful. The National City Bank of New York siphoned through
money to Sweden: the SKF profits from Latin American dealings.
Officially, all National City Bank’s Swedish accounts were frozen
on Roosevelt’s orders. Somehow, Batt managed to use his govern¬
ment influence to have the funds specially unblocked by license for
transfer across the Atlantic.

As war went on, it became necessary to cloak SKF shipments
to South America in case members of the FBI should discover what
was going on. As a cover, von Rosen set up a subsidiary that took
a leaf out of the Standard Oil book. Registered in Panama, it was
protected by Panamanian laws from American seizure. Ball bear¬
ings traveled from American ports on Panamanian registered ves¬
sels. Over 600,000 ball bearings a year traveled in this manner to
Nazi customers in South America including Siemens, Diesel, Asea,
and Separator, as well as Axel Wenner-Gren’s Electrolux and
Behn’s ITT. Transfer was made of purchasing funds through the
Nazi Banco Aleman Transatlantico. Von Rosen used a crude code
in his telegrams, all of which were passed through the diplomatic
bag. “Wild duck glace arrived, also Schnapps’’ meant that ball bear¬
ings had arrived along with their component parts.

When Germany began to run short of ball bearings in 1943, de¬
spite the vast shipments from Sweden and its own local production,
more were needed from South America. So von Rosen arranged for
reshipment from Rio and Buenos Aires via Sweden. The British,
utterly dependent on SKF for their own ball bearings, appeased the

GLOBES OF STEEL

143

dubious corporation by issuing special Navicerts allowing vessels
to pass unsearched through the blockade to Sweden. Even the Rus¬
sians concurred—they, too, needed SKF.

A curious series of events took place in 1943. Early in October,
Batt flew to Stockholm in an American Army bomber accompanied
by Army representatives. The ostensible purpose of the mission was
to secure further supplies of ball-bearing production machinery, de¬
spite the fact that there was quite sufficient in Philadelphia. Details
of his meetings with Jacob Wallenberg and Wingquist were not dis¬
closed. However, on October 14, when General Henry H. (“Hap”)
Arnold, U.S. Army Air Force chief, commanded a raid on SKF’s
giant Schweinfurt factory, he was shocked to discover the news of
the supposed bombing had been leaked to the enemy. The result
was that America lost sixty planes in the attack. Arnold told the
London News Chronicle on October 19, “I don’t see how they could
have prepared the defense they did unless they had been warned
in advance.”

For the first time since Pearl Harbor there were some signs that
action might be taken by the American government. The energetic
Jean Pajus spearheaded a drive to expose SKF.

Meanwhile, General Carl Spaatz of the U.S. High Command in
London was furious because the Swedes were tripling their ship¬
ments to Germany with British and American official authorization
after the raid on Schweinfurt. He called U.S. Ambassador John G.
Winant to his headquarters on March 13, 1944, and blasted him
about his handling of the matter, claiming that Winant was “playing
along with the British.” Spaatz screamed, “Our whole bomber of¬
fensive is being nullified!” Winant, red-faced and smarting from the
dressing down, asked his assistant Winfield Riefler to look into the
matter. Riefler found that the British Ministry of Economic War¬
fare, which was supposed to enforce the restrictions of shipments,
was failing to do so because Britain was as dependent on Swedish
SKF as Germany—following Luftwaffe raids on the SKF subsid¬
iary’s plant in Luton.

On March 20, Lauchlin Currie wrote to Dean Acheson that he
was drastically concerned by the gravity of the situation: “During
the past few months our air forces have made sixteen heavy and
costly raids for the sole purpose of destroying the ballbearing pro¬
duction capacity of the Germans. But while we are eliminating Ger-

144

TRADING WITH THE ENEMY

man production at tremendous sacrifice in planes and men, Swedish
production continues to be available to the enemy. Swedish produc¬
tion continues to be available to the enemy. Swedish shipments to
Germany in 1943 were at an all-time peak.” Acheson did not reply.

On April 13, 1944, U.S. Ambassador Herschel Johnson had a
meeting with Swedish Foreign Minister Christian E. Giinther in
Stockholm. Giinther pointed out that negotiating the three-way
pact between the United States, Britain, and Germany had been im¬
mensely difficult and that if Sweden should break the pact now, Ger¬
many could react violently. Gunther added sharply, “American
public opinion would see the justice of the position taken by Sweden
if Sweden should publish the entire correspondence in which it
would appear that trade between Sweden and Germany was on a
contract basis known to the Allied governments and based on prior
agreements with them.” Thus it was clear the Swedish Foreign Min¬
ister was threatening the United States: if it didn’t play along, Swe¬
den would disclose to the American public that its government was
making deals with the enemy.

Lord Selbome, Minister of Economic Warfare, gave his views to
Riefler of Winant’s staff in London. He was responding to a U.S.
government proposal that SKF should be put on the blacklist if it
refused the request for an embargo. Selborne totally disagreed with
the proposal. He felt that such a threat would be a fatal blunder.
He begged Riefler to dissuade the U.S. government from such a
course. Instead, the British government felt that the entire output
of SKF should be bought by the United States outright: a sure
source of dollars for the Nazis. It was clear that Selbome was con¬
cerned that in the event of blacklisting, Britain would be left without
its vast influx of ball bearings. Not only were bearings immediately
expected by ship, but there were 350 tons being held at Goteborg
by British supply authorities. He felt that these would be held hos¬
tage, and seized by the Swedes in reprisal if Swedish property in
the United States or Britain should be seized. There was also the
danger of thousands of tons of bearings loaded on two British cargo
ships, Dicto and Lionel , being hijacked at sea.

On April 25, Under Secretary of War Robert P. Patterson advised
Secretary of War Stimson that Sweden had rejected the U.S. de¬
mand to stop shipments to Germany in excess of those agreed to
in 1943. He wrote, “Sweden, I am sure, will try to drag the matter

GLOBES OF STEEL

145

out by discussions, holding out hopes to us that expons to Germany
will be reduced in the future. This has been her policy in the past,
and she’ll try it again.” Patterson pointed out that Sweden was fur¬
nishing Germany with munitions that killed American soldiers, that
20 percent of the shells fired at Americans came from Swedish iron
ore, and that the Swedes were getting large quantities of petroleum
when the British and U.S. were short of it for war purposes. He
added, “I . . . believe that the government should make the facts
public.” It was a futile hope.

On April 27, Lieutenant James Puleston, Navy liaison in the For¬
eign Economic Administration, wrote to Lauchlin Currie that “no
confidence whatsoever” should be placed in Jacob Wallenberg, that
the idea of the embargo was a “mirage” and “a pleasant dream.”
He felt that a much more effective way to secure cooperation was
for the State Department to threaten cutting off oil supplies to Swe¬
den; he disliked Swedish ships “hanging around” American and Ca¬
ribbean ports “because we believe that there are enough
pro-German crews [in the Swedish navy] to act as spies.” He added
in his report to Currie:

If we dilly-dally or accept the half measures proposed by Wal¬
lenberg and the State Department we abandon the last battle
before it begins.... If we go through the [oil embargo] we can
at least put the additional loss of American lives where it be¬
longs—squarely in the State Department. If we do not, we will
share this responsibility and, personally, I don’t want to think
that a single American soldier died because I did not press the
State Department for the proper action.

Pressing the State Department was no easy matter. However, in
April 1944, Treasury was finally able to induce Dean Acheson to
agree to hire someone to fly to Sweden and try to buy off the En-
skilda Bank from supplying Germany.

The choice of special emissary fell on a curious figure. Instead
of sending Currie or Harry Dexter White, Acheson and Morgen-
thau selected a banker and movie executive of Paramount Studios,
Stanton Griffis, who was better known as a socialite than as an ex¬
pert in economics. He flew to London, where he was joined by a
smooth young economist and Red Cross vice-chairman named

146

TRADING WITH THE ENEMY

Douglas Poteat. The two men squeezed into a cramped Mosquito
aircraft and flew through violent electrical storms to Stockholm.
There, at the gloomy and overpowering Grand Hotel, they met with
Ambassador Johnson and with Jacob Wallenberg.

On the second morning of his stay at the Grand, Griffis woke up
to see a waiter standing with a breakfast. The man said in a heavy
Balkan voice, “I am an American secret agent. I will be working
for you and will keep you informed. In Room 208, where you will
be meeting with [the Swedes], the Germans have installed listening
devices. In Room 410 is Dr. Schnurre of the Nazi government, who
is hoping to outbid you in the ballbearings negotiations.” Griffis was
astonished by this little speech. He assumed the man was a jokester
or a plant. But from that moment on the waiter, who was working
for the OSS, kept him informed of every movement of Wallenberg
and the Nazis.

The negotiations in the gloomy Enskilda Bank boardroom domi¬
nated by Wallenberg family portraits were slow and tedious. Griffis
obviously knew nothing of the links between Batt and the Axis, be¬
cause in the course of his discussion he said to one of the SKF execu¬
tives, Harald Hamberg, “You can hold out as long as you like, but
the U.S. is not going to stand by while you make machines to kill
American boys.” Hamberg, no doubt hiding his knowledge of the
matter, replied, “How do you know that our ballbearings help kill
American boys?” Whereupon, Douglas Poteat took out a handful
of ball bearings and laid them on the table. “Where were these
made?” Poteat asked. The executive examined them. “In Sweden,”
he said. And Poteat added, looking the executive in the eye, “Every
one of these was taken from a German plane shot down over Lon¬
don.”

At last, after several weeks, an agreement was reached. Griffis
authorized $8 million to be paid to the credit of the Enskilda Bank.
When the war was over, Griffis guaranteed, there would be no anti¬
trust action against SKF. SKF would keep all of its German proper¬
ties forever, and all SKF Nazi connections in the United States
would be forgiven, forgotten, and—more importantly—unexposed.

Meanwhile, public criticism was beginning to surface. SKF work¬
ers in Philadelphia got wind of the dealings with the Nazis. An arti¬
cle appeared in the liberal newspaper PM, charging von Rosen and
Batt with gross malfeasance and trading with enemy collaborators.

GLOBES OF STEEL

147

Various disaffected SKF executives, troubled by the nature of the
corporation to which they belonged, began to snitch.

Batt gave The Washington Post an interview on May 14, 1944,
saying that production in Philadelphia would be hurt if the com¬
pany were nationalized or Proclaimed Listed in response to press
criticism from the Left. He insisted he was not a Nazi front and
he denied that Goring’s relative was his partner. He described von
Rosen as “a salesman.” He admitted that he voted 95 percent of
the stock without revealing that his ownership was to protect the
company from seizure as an alien concern.

But the loyal American executives, and workers on the assembly
lines in Philadelphia, grew increasingly restless. There was a series
of union meetings, in which shop stewards talked angrily of a strike.
Many workers went home to their wives and children, muttering
about collaboration with the enemy. It seemed that what the U.S.
government had lamentably failed to do—put SKF out of busi¬
ness—the workers might.

Batt didn’t lose control. On May 16 he called a mass meeting of
the eight thousand employees of SKF in the large truckyard of the
factory. His wavy black hair, strong face, and powerful
broad-shouldered figure always inspired confidence in the workers,
who tended to trust him no matter what the evidence against him.
He delivered a speech, standing on a high platform flanked by four
American flags flapping in the wind. He shouted, “None of our pro¬
duction is reaching the enemy! I assure you of that, my friends! All
these rumors about Nazis influencing our company in Sweden are
sheer nonsense! These kinds of rumors are just Hitler propaganda
to pull us down!”

This outrageous lie was greeted with cheers by eight thousand
gullible workers. They were hugely relieved and almost ran back
to the assembly lines. Somebody in the government got to PM and
forced it to issue a retraction. On May 18 the Treasury and the Of¬
fice of the Alien Property Custodian issued a joint statement to the
press to the effect that following an investigation of SKF, it was “to¬
tally absolved of all alleged collusion with the enemy.” The state¬
ment went on, “Both the War and Navy departments have advised
the Treasury Department and the Alien Property Custodian that
all of the production of SKF Industries and SKF Steel contributes
to the war effort of the United States. . .. SKF Industries and SKF

148

TRADING WITH THE ENEMY

Steel have excellent records for war production, and state that any
serious loss of production would have an immediate and serious ef¬
fect on production of war munitions needed for plant operations.”

On June 13 the agreement was concluded between SKF and the
governments of the United States and the United Kingdom regard¬
ing reduced bearings exports to the enemy. Despite the expert exam¬
ple of public relations shown by William L. Batt, it was clear that
the government was uneasy about advertising the fact that Nazi
Germany was still being benefited by the Allies. A note on the top
of the State Department memorandum dated June 13 and listing
the amount of shipments reads: “It has been agreed to keep this ar¬
rangement secret not only during the period of its operation, but
also after its termination.”

In July a series of memoranda of the Foreign Economic Adminis¬
tration was shuffled between government departments alleging that
so far from adhering to the $8 million agreement, SKF was indulg¬
ing in a so-called triangular trade, shipping via Spain, Portugal, and
Switzerland to the enemy to avoid charges that they were shipping
directly. Every effort possible was made to get around the agree¬
ments. Unfortunately, the memoranda show, since the U.S. govern¬
ment had whitewashed SKF, it could scarcely expose these new ac¬
tivities. Under Secretary of War Patterson kept hammering away
at the issue, but nothing was done about it. A helpless Lauchlin Cur¬
rie could merely try to reassure everyone that everything would be
all right in the end.

On behalf of the Foreign Economic Administration, Jean Pajus
prepared a devastating indictment of William Batt, Hugo von
Rosen, and SKF as a whole on September 15, 1944. Following a
pocket history of the corporation up to date, he summarized the
key matters as follows. He stated that Batt had been “under SKF
orders to supply the Latin American market, irrespective of current
war orders in the United States, and to base all sales in the United
States primarily on the long-term business interests of the company
rather than the needs of the war effort.” He pointed out that direc¬
tives from the Swedish plant came through the Swedish Legation
in Washington, thus escaping the normal channels of censorship.
These directives showed that a company collaborating with the
enemy could exercise control of a vital U.S. industry.

Pajus reiterated that SKF production had not reached even mini-

GLOBES OF STEEL

149

mum expectations; that there had been great lapses in ball-bearings
deliveries to vital war industries; that as a result planes had been
grounded; that William L. Batt could have corrected the situation
but had not done so. He summarized the deliberate tying up of raw
materials, the associations with enemy corporations, and the overall
disgrace of a so-called American company controlled by enemy in¬
terests. SKF remained unpunished.

The Norwegians, who had suffered enough from Swedish collu¬
sion with the enemy, struck out in the only way possible. They
showed their protest on December 4, 1944. Norwegian workers at
the SKF plant in Oslo destroyed the entire factory by explosion and
fire, disposing of $1.5 million worth of ball bearings.

Meanwhile, Dean Acheson failed to put SKF Philadelphia on the
Proclaimed List, as he was empowered to do. Instead of taking new
action against SKF as new public criticism began to surface, he sim¬
ply urged Morgenthau and Currie to keep up a series of public rela¬
tions statements that SKF was loyal and decent—in order not to
hamper the war effort.

Lauchlin Currie’s belief that matters would improve as the war
neared its end proved to be unfounded. On December 9, 1944, Jean
Pajus wrote to U.S. Ambassador Johnson in Stockholm that he was
shocked at the continuing trade. He wrote, “After the losses in men
and planes sustained in the attack on Schweinfurt, what would the
American people think if they learned that SKF is still supplying
the German war machine with ballbearings?”

By early 1945 it was painfully obvious that Stanton Griffis’s $8
million was largely useless. Not only did it absorb merely a part
of the ball-bearings shipment, and a small part at that, but the
Swedes were infringing on the agreed maximum shipments all down
the line. It was only when it was obvious that Hitler was about to
lose the war that Sweden finally showed some signs of adhering to
its agreements.

The war ended as Griffis had arranged, without punishment for
William L. Batt or any of his circle. Hugo von Rosen was, of course,
protected by his “neutrality.” In the weeks at the end of the war,
Batt suddenly turned up in Germany and visited the military decar¬
telization branch in Berlin. He conferred with Brigadier General
William H. Draper, in charge of decartelization, making sure that
the secret promises made by Griffis to Wallenberg would be kept:

150

TRADING WITH THE ENEMY

that nothing would be done to disrupt the Swedish interests in SKF
in Germany, that none of the plants in Germany would be broken
down or removed, and that he and his American colleagues would
not be subject to antitrust action. It goes without saying that the
promises were kept.

The Film Conspiracy

I.G. Farben’s joint chairman Hermann Schmitz was crucial to the
activities of The Fraternity. Bom in 1880 in the grim industrial city
of Essen, Schmitz was the child of impoverished parents. He was
driven from the first by a desire to obtain immense power. He
started work at the age of fifteen, slaving as a leather-sleeved clerk
at ledgers in a metals corporation. He studied at night school, learn¬
ing about chemistry, fuels, and gases. Gifted with an extraordinary
memory, he obtained a brilliant grasp of many branches of science
by age twenty. As with millions of Germans, his nationalism flared
during World War I. After service in the army this muscular,
broad-shouldered, short-necked young man forced his way to the
top of one of Germany’s biggest steel corporations at the age of thir¬
ty-three. Secretive, difficult, mistrustful yet dynamic, he used his
government connections to the limit, bludgeoning his way into the
Economics Ministry in 1915.

He became a close friend of Hjalmar Horace Greeley Schacht,
who introduced him to the idea of a world community of money
that would be independent of wars and empires. He became a domi¬
nant figure in the chemicals trust that he helped his friend and col¬
league Carl Krauch forge into I.G. Farben in 1925. Encouraged by
Schacht, he developed a series of crucial friendships in England and
the United States, always aiming unerringly for the greatest powers.
One of his earliest allies was Walter Teagle of Standard Oil, who
shared his views on international financial solidarity. Another was
Edsel Ford, son of Henry Ford.

In 1929, Schmitz, his nephew. Max Ilgner, Walter Teagle, Edsel
Ford, and Charles E. Mitchell of the ever-reliable National City
Bank jointly set up the American Farben organization known as
American I.G./Chemical Corp. Hermann Schmitz became presi¬
dent, with his brother Dietrich delegated to take over in his absence
in Europe. It was an identical arrangement to that made by the von

151

152

TRADING WITH THE ENEMY

Clemm brothers, giving the family a foothold on both sides of the
Atlantic that would survive any possible future war.

In 1931, President Herbert Hoover received Schmitz at the White
House. Hoover shared Schmitz’s attitude toward Russia: that it
must be crushed. Hoover had lost extensive Russian oil holdings
during the communist revolution.

So great was the enthusiasm of the German-American population
for a recovering Germany that Schmitz’s $ 13 million worth of de¬
bentures were sold by the National City Bank in one morning. The
wealth and power of German-American I.G. were almost beyond
calculation. The international company was the chief economic in¬
strument of the German government. It produced a vast range of
chemicals and chemical products, including artificial oil, synthetic
rubber, aviation gasoline, plastic, nylon, and numerous poison
gases, including the deadly insecticide later used at Farben’s com¬
bined rubber factory and concentration camp, Auschwitz, where
the SS murdered some four million Jews. Schmitz helped to found
the Bank for International Settlements and was a member of the
board until the end of World War II; he also launched an invest¬
ment policy whereby American I.G. had, by 1941, $5,042,550 in¬
vested in Standard Oil of New Jersey, $838,412 in Du Pont/General
Motors, and $155,000 in Standard Oil of California.

With Krupp, I.G. Farben was an executor of Goring’s Four-Year
Plan to make Germany militarily self-sufficient by 1940. By 1939,
I.G. provided the Nazis with 90 percent of their foreign exchange,
95 percent of their imports, and 85 percent of all the military and
commercial goods provided for by the Plan.

In 1932, Schmitz joined forces with Kurt von Schroder, director
of the BIS and the enormously wealthy private bank, J. H. Stein,
of Cologne, Germany. Schroder was a fanatical Nazi. On the sur¬
face he was suave, elegant, impeccably dressed, with a clean-cut
face. In private he was a dedicated leader of the Death’s Head Bri¬
gade. During the war he could be seen driving from his office in
his sober pinstripe, changing into a black and silver uniform covered
in decorations, and continuing to a meeting by torchlight of his per¬
sonal storm troopers. It was this SS man who was most closely
linked to Winthrop Aldrich of the Chase Bank, Walter Teagle of
Standard Oil, Sosthenes Behn of ITT, and the other American
members of The Fraternity. In 1933, at his handsome villa in Mu-

THE FILM CONSPIRACY

153

nich, Schroder arranged the meeting between Hitler and von Papen
that helped lead to Hitler’s accession to power in the Reichstag.

Also in 1932, Hitler’s special economic advisor Wilhelm Keppler
joined Schroder in forming a group of high-ranking associates Of
The Fraternity who could be guaranteed to supply money to the
Gestapo. They agreed to contribute an average of one million marks
a year to Himmler’s personally marked “S” account at the J. H.
Stein Bank, transferable to the secret “R” Gestapo account at the
Dresdnerbank in Berlin.

This group became known as the Circle of Friends of the Econo¬
my. Schmitz was the largest contributor to the Circle, which in¬
cluded representatives of ITT and Standard Oil of New Jersey.
Schmitz supplied considerable funds to Himmler separately, partly
to secure his properties from seizure by the Gestapo, and to insure
contracts for the concentration camps.

In the late 1930s, Schmitz began to conspire with the young and
hard-bitten Walter Schellenberg, who was rapidly rising to become
head of the SD, the Gestapo’s counterintelligence service. Army In¬
telligence documents declassified in 1981 show that Schellenberg
discussed Schmitz as head of a Council of Twelve. The council
would place Hitler under the protection and rulership of Himmler
while the Fiihrer remained a prisoner of Berchtesgaden. Knowing
that Schmitz was dedicated to Himmler and the Gestapo cause,
Schellenberg plotted constantly toward this end. However, Himm¬
ler vacillated constantly. He could not bring himself to depose the
Fiihrer, nor did he expose Schellenberg to the Fiihrer.

The underlying purpose of the Schellenberg plan, revealed in the
same recently declassified Army Intelligence report, was clearly to
bring about the negotiated peace between Germany and the United
States that was the overriding dream of The Fraternity.

As that war approached, Schmitz’s brother Dietrich, acting on
instructions from Berlin, moved from there to Manhattan and went
into action to undermine any prospective American war effort. De¬
spite the fact that he was an American citizen, enjoying all of the
privileges of a glamorous social life in New York, he had involved
himself in espionage with Farben’s N.W.7. intelligence network.
American I.G. owned the General Aniline and Film works and the
huge film corporation Agfa and Ansco. It also owned Ozalid, the
multimillion-dollar blueprint corporation. The General Aniline

154

TRADING WITH THE ENEMY

works supplied khaki or blue dyes for army , air force, or naval uni¬
forms, which gave Schmitz’s army of salesmen spies access to every
military, naval, and air force base before and after Pearl Harbor.
These “salesmen” talked the forces into using Agfa/Ansco for their
private instruction films and having their photographs of secret in¬
stallations developed in American I.G.’s laboratories. They also ar¬
ranged to have every Ozalid print of secret military and naval plans
copied and filed at their headquarters in Berlin.

The person responsible for this remarkable espionage stunt was
Hermann and Dietrich Schmitz’s nephew, plump, jolly Max Ilgner.
Ilgner’s motivation was to infiltrate at the top of Farben and prove
himself indispensable to the company. He allied N.W.7. with the
A.O., the Organization of Germans Abroad, an intelligence net¬
work which came directly under Walter Schellenberg. He set up an
army of five thousand secret agents headed by Nazi Consul Fritz
Wiedemann, operating through American I.G., which penetrated
North and South America, weaving through military, naval, and
air force bases as staff to supplement the information supplied by
the I.G. salesmen. Between the two sets of spies Germany had a
very clear picture of American armaments before Pearl Harbor.

Like Hermann Schmitz, Max Ilgner sent his brother to carry out
his purposes in the United States. Rudolf Ilgner, an equally pushy,
greedy, grasping opportunist, became a leading executive under
Dietrich Schmitz in New York. He set up Chemical Co.—a “Statis¬
tical Branch” of I.G. dedicated to espionage. He made contact with
a famous priest. Father Bernard R. Hubbard, known as the Glacier
Priest because of his work as missionary and explorer in the frozen
wastes of Alaska. The friendship had a purpose. In 1939, just weeks
after war broke out in Europe, U.S. Secretary of War Henry Stim-
son asked Hubbard as a special favor to undertake a tour of strategic
U.S. Army bases in Alaska. On the pretext of giving a lecture tour,
he was to make a complete movie and still photographic survey of
the bases for use at military headquarters at the War Department
in Washington.

Innocently if recklessly, Father Hubbard told Rudolf Ilgner of
his assignment. Ilgner told him that in the goodness of its spirit,
American I.G. (now known as General Aniline and Film) would
present him with free cameras and film from its finest Agfa color
wholesale supplies. Naturally, Ilgner pointed out, Hubbard would

THE FILM CONSPIRACY

155

want to process the film in General Aniline and Film's laboratories.
Hubbard agreed. Apparently no one in military intelligence both¬
ered to consult FBI or State Department files that showed the
GAF-Nazi connection. Hubbard undertook his long and difficult
expedition, through blizzards and rainstorms, returning with a
priceless record of the whole United States northwestern defense
system. This, Rudolf Ilgner naturally forwarded to his brother at
N.W.7. in Berlin.

Simultaneously, the Army began to photograph the Panama
Canal for defense purposes. Rudolf Ilgner offered the Army Agfa
film at a very low price. The films were processed and shipped to
Berlin. Ilgner had a sense of humor. He gave the American govern¬
ment copies of the movies and still photographs and kept the origi¬
nals, which were shipped via the Hamburg-American steamship line
in 1941. The president of this company was Julius P. Meyer, head
of the Board of Trade for German-American Commerce, whose
chairman was—Rudolf Ilgner.

In September 1939 the Schmitz brothers and the Ilgners realized
that with the outbreak of war in Europe, the name I.G.—as in Far-
ben—might put off some of the scores of thousands of American
smaller shareholders who were unwittingly helping to finance Hit¬
ler.

Rudolf Ilgner burned all of his incriminating records. The direc¬
tors instructed their publicity team to lay off any further plugging
of Nazi superefficiency as a selling point. It was thus that the com¬
pany had become General Aniline and Film. The I.G. Farben sub¬
sidiary I.G. Chemie in Switzerland, run by the Schmitzes’ broth-
er-in-law, owned 91.5 percent of the stock through—need one
add?—the National City Bank of New York and the Chase National
Bank. The board still included William E. Weiss of Sterling Prod¬
ucts and Edsel Ford; Teagle had resigned in 1938 following much
unwelcome publicity. In his place James V. Forrestal was appointed
to the board. Forrestal was a partner in the part-Jewish banking
company of Dillon, Read, which had helped to finance Hitler in the
earlier days. He was soon to become Under Secretary, and later Sec¬
retary, of the Navy. Another on the board was former Attorney
General Homer S. Cummings. Cummings, who had done much to
protect American I.G. when he was in his official post, now became
the leading defense lawyer for the corporation. Just how qualified

156

TRADING WITH THE ENEMY

he was for the job may be judged by the fact that he slipped secret
intelligence to Hans Thomsen, Nazi charge d’affaires in Washing¬
ton. In a telegram marked Top Secret sent to Germany on June 11,
1940, Thomsen revealed that Cummings had supplied him with de¬
tails of a private conversation with Roosevelt. Cummings told
Thomsen’s special contact that the President would make use of
every legal trick in order to circumvent neutrality and help Britain
in the Atlantic; that should the war last long enough for American
armaments to be built up, he would give them to England, and that
should the war end with Hitler defeating England and France,
America would be “sweet and polite and gracious’’ toward Ger¬
many for two years, during which she would build up her armed
forces regardless of cost. Roosevelt said Germany would be crushed
if she tried to attack Canada or the Caribbean. Thus, a former attor¬
ney general in the pay of a known Nazi corporation supplied Hitler
with secret intelligence on the private thoughts of the President.

General Aniline and Film could not have functioned as a branch
office of N.W.7., the German Secret Service and The Fraternity
without help in the Senate and in the House. Hans Thomsen’s pri¬
vate memoranda allege that GAF, in addition to financing N.W.7.
agents and the A.O. in America, supplied funds to significant figures
of the House to secure propaganda arrangements. A telegram from
Thomsen to Joachim von Ribbentrop, the Foreign Minister in Ber¬
lin, dated June 12, 1940, read:

A well known Republican Congressman who works in close
collaboration with the special official of Press Affairs will invite
some 50 isolationist Republican Congressmen on a 3-day visit
to the Party Convention, so that they may work on the dele¬
gates of the Republican Party in favor of an isolationist foreign
policy. $3,000 are required.

In addition, the Republican in question is prepared to form
a small ad hoc Republican committee, which, as a counterblast
to the full-page advertisement by the [William Allen] White
committee, “Stop Hitler Now,’’ would, during the Party Con¬
vention, publish in all of the leading American newspapers a
full-page advertisement with the impressive appeal “Keep
America Out of War.” The cost of this would be about $60,000
to $80,000, of which half will, in all probability, be borne by

THE FILM CONSPIRACY

157

his Republican friends. In view of the unique opportunity I
have accepted the proposal. I request telegraphic instructions
as to whether [the project] is of interest and if it is, that the
funds referred to be transferred.

Rjbbentrop’s office cabled back on June 16: “The Foreign Minis¬
ter agrees to the adoption of the countermeasures against pro-Ally
propaganda activities in the U.S.A.” The money was released and
paid to the congressman.

Who was he? Representative Stephen A. Day, a pro-Nazi from
Illinois, in partnership with a group of ardent admirers of Hitler
including Senator Rush D. Holt of West Virginia and Senator Er¬
nest Lundeen of Minnesota.

On July 19, 1940, Thomsen reported the success of the mission.
He telegraphed Berlin: “As I have reported, isolationist Republican
Congressmen at the Republican Convention succeeded in affixing
firmly to the Party platform the language of isolationist foreign pol¬
icy that will not let itself become entangled in a European war.
Nothing has leaked out about the assistance we rendered in this.
. . . For travel assistance and costs of the advertisements, $4,350
have been disbursed, which please refund to the Embassy.”

As the international situation drew America to the brink of war,
Max Ilgner and his uncle Hermann became increasingly nervous
about the future of their New York operation. They summoned two
crucial directors of GAF to a meeting in Milan, on May 2, 1941,
to discuss how best they could function if Hitler and Roosevelt
clashed in war. These men were Alfredo E. Moll and Ernest K. Hal-
bach—both of whom were Americans. Moll and Halbach agreed
that they would slip drugs and patents to South America through
an American export firm called Fezandie and Sperrle, which had
an impeccable background and would not be seized in time of war.
Hugh Williamson, a director of General Aniline, allegedly handled
materials and agents. Meanwhile, Halbach arranged to have his own
subsidiary, General Dyestuffs, reconstructed as an American com¬
pany that also would not be subject to seizure. In New York, Diet-
rich Schmitz bundled all the incriminating Chemnyco documents
into a furnace and watched them bum.

On May 9, 1941, Attorney General Robert H. Jackson yielded
to pressure from Roosevelt. He seized American I.G.’s deposits at

158

TRADING WITH THE ENEMY

the National City Bank of New York. But it turned out that only
$250,000 of the half-billion-dollar corporation account was in the
bank vault. Evidently, Ilgner had good contacts, because only six
weeks later all except $25,000 of the money was unfrozen. It looked
as though I.G. had gotten away with everything, but Morgenthau
and Roosevelt froze all Swiss holdings in the United States and with
them, American I.G. Its Swiss cloak had proved its undoing for the
time being.

Sosthenes Behn of ITT proved to be a useful Fraternity member
when he stepped in on Goring’s suggestion to try to buy General
Aniline and Film, thus Americanizing it, and removing the Swiss
freeze order, and preventing it from seizure in time of war. He
would make a neat exchange of ITTs German properties so that
these, too, would escape seizure. The inescapable National City
Bank naturally encouraged the transaction, but Hermann Schmitz
was convinced that Behn was trying to outfox him and instead he
decided to sell the company to one of its own subsidiaries. Schmitz
outsmarted himself. The deal nearly went through but it was too
much for Morgenthau, who stopped it. Schmitz tried again. Part
of the American I.G. shares were owned by a Dutch subsidiary. He
tried to have that subsidiary buy out GAF, but Morgenthau stopped
that arrangement, too.

With the advent of Pearl Harbor, Morgenthau set his sights on
an outright seizure of GAF for the duration. He had already closed
down or nationalized fifty related firms of which he was suspicious.
Shortly after Pearl Harbor, Morgenthau begged Roosevelt to let
Treasury run GAF instead of the Department of Justice or the Of¬
fice of the Alien Property Custodian, which was then in the process
of being formed. He was strongly opposed to Roosevelt’s suggestion
that the tycoon Leo T. Crowley, a bete noire of his, should take over
General Aniline and Film as Alien Property Custodian. He didn’t
trust Crowley, an appointee of the weak and vacillating Attorney
General Francis Biddle. He knew that Crowley, a big, bragging,
loudmouthed man, was a close friend of the corporations: a protec¬
tor of big money in the Jesse H. Jones mold. Crowley had begun
as a Wisconsin delivery boy, had fought his way up through the elec¬
trical business. A prominent Roman Catholic, Knight of Columbus,
and recipient of the Order of St. Gregory, the Great Order of
Knights, from Pope Pius XI, he was a pillar of the business estab-

THE FILM CONSPIRACY

159

lishment and, Morgenthau felt, the last person on earth to take over
General Aniline and Film.

While the Crowley matter remained undecided, Morgenthau, on
January 13, 1942, invaded General Aniline and Film and began
sacking some obviously pro-Nazi personnel. Roosevelt was 100 per¬
cent behind him and told him that “in case anybody asks you, you
can say that the President [says] ‘Kill the son-of-a-bitch.’ ”

However, Roosevelt almost simultaneously undermined Morgen-
thau’s power over the company by putting in temporary charge of
it a servant of big business, the wealthy lawyer John E. Mack. Mack
brought in the ever-scheming William Bullitt as chairman of the
board. Mack opposed the removal of Nazi officers and flatly refused
Morgenthau’s demand that he stop using them in a consulting ca¬
pacity. Morgenthau was disgusted by the huge salaries Mack and
Bullitt were drawing for simply covering for Nazis. Mack even tried
to set up a so-called “plant management committee/* staffed in its
entirety by hardcore former I.G. Farben executives.

On February 16, 1942, Morgenthau won a round against Mack
by seizing 97 percent of the shares of GAF. Bullitt resigned at once.
Mack stayed on, furiously arguing with Morgenthau and his policy.
Meanwhile, Roosevelt kept mentioning that Crowley was waiting
in the wings. Frustrated, angry with the President, Morgenthau
wrote to Harry Hopkins on February 26, “Roosevelt wants to be
in the position that if I go ahead and clean all of this up, he doesn’t
know anything about it, and he can say he doesn’t know anything
about it.’’*

Hopkins conveyed his fury to the President, who on March 5 at
last told Morgenthau to “proceed at once with Aniline.’’ However,
scarcely a week later, Roosevelt suddenly appointed Crowley the
head of General Aniline and Film! It was typical of Roosevelt’s
equivocation that he would do this. Within twenty-four hours of
taking office, Crowley put Ernest K. Halbach, perhaps the most
committed pro-Farben executive in the whole organization, in as
chairman. He declined to fire him even when Halbach was indicted
three times for dealing with Farben after Pearl Harbor. To Morgen¬
thau’s intense disgust he hiked his salary from $36,000 to $82,000

*Blum, John Morton: From the Morgenthau Diaries: Years of War.
1941-1945: Boston: Houghton Mifflin.

160

TRADING WITH THE ENEMY

a year and with shocking boldness reappointed Alfredo E. Moll,
Halbach’s collaborator, as GAF head of sales in South America.
Both men were given back shares that Morgenthau had seized, and
their bank accounts at the National City Bank were unfrozen on
Crowley’s specific instruction. Nor was Crowley content with this.
His partner in the multi-million-dollar firm Standard Gas and Elec¬
tric was the immensely wealthy Victor Emanuel, who had obtained
control of SGE with the aid of the Schroder banks. Crowley contin¬
ued to receive a salary from SGE and from the J. Henry Schroder
Bank of New York while remaining Alien Property Custodian! John
Foster Dulles, a close friend of Crowley’s and Halbach’s, became
special legal counsel for Crowley. He was also Halbach’s attorney,
suing the government for the recovery of funds.

By 1944, after Crowley had been in charge of GAF for two years,
he and Francis Biddle had still failed to try three antitrust indict¬
ments returned against General Aniline and Film on December 19,
1941, accusing the corporation of being part of the world trade con¬
spiracy for Hitler. They had failed to enforce its acceptance of con¬
sent decrees that would bar it permanently from resuming its ties
with I.G. Farben. They had failed to merge it with General Dye¬
stuffs, which still got 10 percent of all GAF sales. They had not
released GAF’s patents, nor had they prepared a report showing
which of those patents had been given it by the Nazi government
for protection from seizure during the war.

I. F. Stone led a storm of criticism against Crowley in PM and
The Nation. Crowley “resigned”—only to find himself in the even
more important position of Foreign Economic Administrator. In
an editorial in PM, on February 10, 1944, Stone wrote: “Crowley’s
resignation is not enough.... We hope that, in picking a new Alien
Property Custodian, the President will pick a man who, unlike
Crowley, is not dependent on private salaries for the bulk of his in¬
come. . . . [We suggest the government] remove from the board of
General Aniline and Film any men associated with Victor Emanuel,
the Schroder banking interests, Standard Oil or any company linked
by business ties with I.G. Farben before the war.” The article con¬
tinued, “Throw open to American business all the dyestuffs, chemi¬
cal, pharmaceutical and other patents owned by General Aniline
directly or through its subsidiary, Winthrop Chemical . . . break
up General Aniline into smaller companies under permanent Amer-

THE FILM CONSPIRACY

161

ican ownership, each handling a different one of General Aniline’s
business interests, so that we may be rid of the monopolistic power
this German-controlled firm exercised in so many products.”

It goes without saying that none of these ideas were followed by
the President.

If was three months after Crowley left his post in March 1944,
that further details of his iniquities came to light. William La Varre
of the Department of Commerce charged before a Senate Postal
Committee meeting on June 1, 1944, that censored information was
being distributed by Crowley through the U.S. government against
the nation’s best interests. He said that two men representing them¬
selves as salesmen for General Aniline and Film sought from him
data from a censored message about Eastman Kodak for use in a
film sales campaign in Latin America. He refused to give the infor¬
mation. La Varre told the committee that instead of freezing Gen¬
eral Aniline, Crowley was running it in competition with Kodak.
The GAF reps had returned to Crowley and then gone back La
Varre with letters saying they were working for the Alien Property
Custodian and they must have the secret data. In view of the fact
the instruction came from the government, La Varre had felt
obliged to hand it over. General Aniline had beaten Kodak hollow
below Panama.

Worse, La Varre found out that when the Mexican government
made a deal with American Cyanamid for the operation of seized
Nazi chemical companies, two of Crowley’s officials flew to Mexico
City in 1944 and bribed everyone in sight to break the arrangement
in favor of General Aniline.

Crowley was not punished. Meanwhile, John Foster Dulles repre¬
sented Mrs. Ernest Halbach in suing the Alien Property Custodian’s
office for the return of her husband’s remaining Nazi shares. Crow¬
ley had been replaced by his assistant, James E. Markham, as Custo¬
dian. Markham was also a director of Standard Gas and Electric!
It is scarcely surprising that Dulles had no problems with Markham
in winning the case. Halbach received a total of $696,554,000 for
properties that the government had seized—plus the compound in¬
terest paid by the U.S. Treasury.

One of the multitudinous branches of I.G. Farben before and dur¬
ing World War II was the General Aniline and Film associate Ster-

162

TRADING WITH THE ENEMY

ling Products, Inc., the colossal drug empire partly financed by the
National City Bank, that manufactured in connection with its sub¬
sidiaries, the Winthrop Chemical Company and the Bayer Compa¬
ny. Sterling, Winthrop, and Bayer distributed the famous pharma¬
ceutical products known as aspirin and Phillips Milk of Magnesia.
Millions of Americans would have been shocked to learn that by
their use of these familiar nostrums they were helping to finance
an army of secret agents north and south of Panama who supple¬
mented the Max Ilgner N.W.7. spy network in supplying informa¬
tion on every aspect of American military possibilities.

A close friend of Hermann Schmitz’s, a director of American I.G.
and General Aniline and Film, William E. Weiss was chairman of
Sterling. He was a tough, stocky, aggressive German-American
from Wheeling, West Virginia. Episcopalian, pillar of the communi¬
ty, expert chemist, he built his flourishing business from the base
of a small drugstore. He early formed an intimate friendship not
only with Schmitz but with Wilhelm Mann, director of Farben’s
pharmaceutical division.

American Bayer, the developer of the aspirin, had been seized
by the World War I Alien Property Custodian in 1918 and closed
down. In buying the company in 1919, Weiss had to sign a pledge
that he would never let anyone obtain control of it who was not
“one hundred percent loyal to the United States.”

Within six months of signing the agreement, Weiss got in touch
with Hermann Schmitz of Farben to find methods of entering into
collusion with America’s former enemy and circumventing the Ver¬
sailles Treaty, which did not permit Germany to build up its drug
industry. His first move was characteristic. Another Pennsylva¬
nian—the brisk, no-nonsense Pittsburgh Scots-Irish attorney Earl
McClintock—had been second-in-command to the Alien Property
Custodian in charge of the German properties. Weiss hired this
bright, smooth, fast-talking young man away from the Custodian
office at $13,000 a year, $10,000 more than he had been getting, and
made him a junior partner. In 1920, McClintock traveled to
Baden-Baden in Germany. In meetings with Carl Bosch and Her¬
mann Schmitz, he reestablished the very links with German Bayer
that he himself had legally broken off on behalf of the U.S. govern¬
ment a mere nine months before.

He helped to set up a clandestine network of agents in South

THE FILM CONSPIRACY

163

America, threading through cities and small towns in order to form
one of the most powerful drug cartels in the world. In the 1920s,
Sterling wholly owned Bayer in the United States. The two compa¬
nies operated in separate offices and factories, but were bound to¬
gether as closely as twin threads.

In *1926, Herbert Hoover as Secretary of Commerce set up a
Chemical Advisory Committee with Frank A. Blair of Sterling,
Walter C. Teagle of Standard Oil, and Lammot du Pont, brother
of Irenee, on the board. Two years later Sterling Dyestuffs was sold
by Weiss to the old and well-established American firm of Grasselli,
which merged with Du Pont and finally became part of General An¬
iline and Film. Thus, The Fraternity strands were knitted together
almost from the beginning.

During the 1920s, Weiss and I.G. had signed a fifty-year agree¬
ment in which they literally carved up the world into market areas,
with each assuming control of specific regions as far as New Zealand
and South Africa. They jointly set up Alba Pharmaceutical Co. I.G.
controlled 50 percent of Alba. And Winthrop, Alba, Sterling, and
I.G. interchanged board members in a thirty-year game of economic
musical chairs.

In 1928 a Nazi agent joined the company. This man was Edward
A. Rumely, an independent financial consultant to Henry and Edsel
Ford—those founder members of The Fraternity.

In World War I, Rumely had been a leading German propagan¬
dist, working with Westrick’s partner. Fraternity lawyer Dr. Hein¬
rich Albert, later head of German Ford. Rumely had spent $200,000
on an advertising campaign urging the readers of 619 newspapers
to protest sending war supplies to the Allies, He had bought the
New York Evening Mail as a German front. In 1918 he was arrested
on charges of trading with the enemy but, although convicted, he
only served one month in jail. Henry Ford had used influence with
President Calvin Coolidge. The day Rumely left prison, Ford, with
a touch of black humor, handed him a parcel of Liberty Bonds as
a stake.

Rumely remained a fanatical German nationalist and an early
Nazi party member. He proved to be Sterling’s chief advisor, work¬
ing closely with Weiss to set up nascent Nazi organizations below
Panama. He was greatly aided by Alfredo E. Moll, who continued
to function in World War II under the malign aegis of Leo T. Crow-

164

TRADING WITH THE ENEMY

ley. To make the picture complete, Weiss used the Dulles brothers
as one set of lawyers and, as another, Edward S. Rogers and part¬
ners, connected to the Rogers Standard Oil family and formerly
legal advisor to the Alien Property Custodian.

Yet another valuable connection came in 1929, when Weiss gave
the vice-presidency of Sterling to Edward Terry Clark, secretary to
President Coolidge and later to President Hoover.

Clark headed a Washington lobby in I.G.’s favor that continued
to function in various forms until after World War II. Ten years
later, after Clark’s death, his papers were sold by his wife to an ob¬
scure hobby shop on Seventeenth Street in Washington, just around
the comer from the White House. The owner, Charles Kohn, spe¬
cialized in rare documents, stamps, coins, and autographs. A tiny
item announced in the press that the Clark letters, which contained
details of the I.G. Farben connections, were in the shop. Within two
hours of reading the announcement, a representative of the German
government pretending to be a document collector turned up with
$100,000 in crisp new banknotes. Kohn refused to part with the let¬
ters at any price: a Jewish veteran of World War I, he had a nose
for German spies. Next day a beautiful young woman appeared, of¬
fering money and physical inducements. Again, Kohn refused.
However, when he handed the letters over to the Library of Con¬
gress, the incriminating documents had disappeared. They have
never been traced.

Throughout the 1930s, Weiss used every avenue for political pro¬
paganda, collection of strategical information, and efforts to sup¬
press equivalent drug production by loyal American companies. On
March 29, 1933, Farben’s Max Ilgner—by now a Nazi officer in Ge¬
stapo uniform—sent a message to Max Wojahn, Sterling export
manager for South America, which read, in part: “You are asked
to refrain from objecting to ‘indecencies’ committed by our [Nazi]
government. . . . Immediately upon receipt of this letter, you are
to contribute to the spread of information best adapted to the condi¬
tions of your country and to the editors of influential papers, or by
circulars to physicians and customers; and particularly to that part
of our letter which states that in all the lying tales of horror [about
Germany] there is not one word of truth.’’

It was agreed that no anti-Nazi newspaper would receive adver-

THE FILM CONSPIRACY

165

tisements from Sterling. Indeed, an advertising contract would be
canceled if the paper changed to an anti-Nazi attitude.

In 1933, after the accession of Hitler, Weiss in his correspondence
with Farben’s Rudolf Mann, indicated that he was ‘‘worried about
the condition of Germany.” However, Mann, who had embraced
the Nazi xloctrine with alacrity from the start, reassured Weiss that
in Germany things would be very much better under the Nazi party.
Weiss stated that he was not inclined to believe the ugly rumors
of things that were happening in Germany but he wanted a more
substantial report. Mann replied, completely endorsing the Na¬
tional Socialist government. Noting that there had been “a few un¬
fortunate cases” he quoted as an excuse the German proverb “Wo
Gehobelt Wird, Da fallen Spane ” (“Where one shaves, the shavings
fall”), which had become popular in Germany a few days before
when Goring used it in the course of a speech. There was further
correspondence of the same type between Weiss and Mann.

In the fall of 1933, Weiss made a trip to Germany. His thir¬
ty-second wedding anniversary was celebrated with great pomp
among Gestapo leaders in Munich. After his return, in a letter of
November 17, 1933, Weiss assured Rudolf Mann that his “Ameri¬
can friends were naturally very much interested in our trip and we
made many inquiries as to existing conditions in Europe. I have in¬
formed them of the remarkable strides made in Germany and you
may rest assured that I will help to give an enthusiastic report of
the conditions as I viewed them in Germany and the splendid prog¬
ress that the country has made under Herr Hitler.”

A young and feisty former employee of I.G., Howard Ambruster,
constantly hammered away at Sterling’s pro-Nazi activities. Foot¬
ball coach at Rutgers, engineer, liberal journalist, chemist, editor,
builder, and contractor, he was a robust, muscular jack-of-all-trades
who spent a lifetime trying to strip bare Sterling’s influences in
Washington. But he had little chance of success. His numerous
memoranda to congressmen and senators were ignored. Every effort
was made to silence him.

Ignoring such small fry, Weiss and Earl McClintock maneuvered
through the Depression years to insure Sterling’s rise to the most
important pharmaceutical corporation in the United States. In
1936, McClintock almost pulled off a major coup. Irritated by the
Securities and Exchange Commission’s investigations into Sterling’s

166

TRADING WITH THE ENEMY

activities, he pulled several strings to take over as SEC chairman.
Fortunately for American security, he did not achieve his purpose.
As Europe moved toward war, he found other protections. He and
Weiss poured a large sum of money into the Democratic National
Committee—and the Republican National Committee as well—to
make sure that whoever won the presidency would prove support¬
ive. In May 1938, McClintock traveled to Basle to confer with Her¬
mann Schmitz and Kurt von Schroder during the meetings of the
Bank for International Settlements. The subject of the discussion
was the best way of handling Sterling if Roosevelt brought the
United States into the war. The conference members agreed that
the vast funds earned by Sterling from distributing Bayer products
in Latin America would be held in the J. Henry Schroder Bank of
New York until the end of the war. In return for this arrangement.
Sterling Products in Germany and in the countries Germany would
occupy would be held in the Stein Bank of Cologne for the duration.
As for the all-important Bayer patents, which could easily be seized
by the U.S. government if they were German-controlled, they would
be sanitized by transferal to Sterling as American patents for the
duration.

I.G. was to continue its Latin American operation under the Ster¬
ling cloak. Goods would be stockpiled for the duration or relabeled
in order to disguise their origin to avoid the freezing of their distri¬
bution as enemy products. A further meeting took place in Flor¬
ence, Italy, in February 1940, with Europe at war. Schmitz and
Schroder again met with McClintock and reconfirmed the arrange¬
ments. In an addendum to the original agreement, funds earned in
South America would be held in local banks for use by Nazis in
exile.

It would have been impossible to achieve these arrangements
without powerful contacts in Washington. Thomas Corcoran, the
famous “Tommy the Cork,” became first the unofficial, then the of¬
ficial lawyer for Sterling. Eventually, he became a director of the
corporation.

In 1934, Corcoran introduced his brother David to Weiss. David
wanted a job. He was an automobile salesman with no other experi¬
ence to speak of, but Weiss hired him on the spot to take over Ster¬
ling’s South American operation.

That operation became a fabulous resource for Nazi Germany.

THE FILM CONSPIRACY

167

In his 15,000-word report to the Truman defense committee in
1942, the young and keen-witted Assistant Attorney General Nor¬
man Littell stated: “When the Nazi government pressed I.G. Far-
ben for money in 1938, it drew on Sterling Products Inc. or its sub¬
sidiaries.” »

The shipments to South America continued from Germany until
the outbreak of war in September 1939. The British blockade cre¬
ated the same problems that it had for Davis and for Standard.
Therefore, Hermann Schmitz was compelled to hand over his South
American distribution to Sterling. The drug supply continued unin¬
terrupted, emanating more and more from New York.

On September 11, 1939, ten days after war broke out in Europe,
Weiss took over the operation of the Latin American businesses in
order to avoid seizure if the United States should enter the war. In
addition he made arrangements to stockpile products for the Ger¬
man agencies to last for at least five years. With $2 million in stock
and $30 million in investments in actual medication in South Amer¬
ica, Weiss and Earl McClintock fought desperately to save their
Nazi association. In February 1940, McClintock flew to Rome to
confer with I.G.’s Rudolf Mann to tell him once again that the alli¬
ances would continue whether or not the United States came into
the war. Mann refused initially on the ground he might be executed
for trading with Germany’s potential enemy. He was evidently more
afraid of Hitler than McClintock was of Roosevelt.

Mann said that providing Sterling took care of the German busi¬
nesses south of Panama, it would be possible to continue the associa¬
tion without actual contact visible to the Nazi government. The Na¬
tional City Bank characteristically agreed to protect the
arrangement indefinitely and not show on any statements that any
of the dealings took place. The reason for this was a fear not of the
U.S. government finding out but of the information slipping into
the hands of German agents.

Max Wojahn of Sterling dealt with the National City Bank loan
that would help finance dealings with the enemy: “To avoid the ap¬
pearance of this loan on the balance sheet at the end of each year,
we would cancel it late in December and renew it early in January.”

On May 31, 1941, I.G. began to make the transfers. It handed
over 75 percent of its Argentine operation to Sterling in return for
money advanced in helping I.G. to finance an Argentine laboratory

168

TRADING WITH THE ENEMY

helping the Nazis in Buenos Aires. This reached the attention of
the U.S. Department of Justice, which ordered the money trans¬
ferred to “miscellaneous income of the Bayer Company” on the
ground that transactions with I.G. were illegal and that the matter
might reach the attention of the public.

Under pressure from Henry Morgenthau, on August 15, 1941,
Weiss signed a consent decree in return for minimal fines in which
Sterling and Bayer would cease their association for the duration.
By now most of the Bayer operation was tucked under the Sterling
cloak. Weiss promised he would not sell Bayer products in South
America under German names. He broke the promise within twen¬
ty-five days of signing the agreement. On September 10, SFI, a Ster¬
ling subsidiary in Rio, advised New York that it was handling its
aspirin product under the old German name. Instead of instructing
his agent to discontinue the distribution, Wojahn told him to pro¬
ceed as usual.

Again under pressure from Morgenthau, who ceaselessly ham¬
mered away at the board, Weiss left the company on December 3,
1941, and returned to his home in Wheeling, West Virginia. Howev¬
er, he continued to exercise an influence behind the scenes. He made
two trips to Albany to attend board meetings at which he sought
to state his case for being reinstated, but this was out of the question:
the company’s image was tarnished enough already. Back in Whee¬
ling, he refused to remove his effects from his office. During the
Christmas vacation he wrote asking for information on products
from the Sterling secret laboratory. Even as late as February 1942
he still had done nothing to clean out his office. He suggested to
his successor, James Hill, that he should have a separate entrance
built and his office could be kept in the building. Hill explained that
this would not be acceptable to Treasury. Hill warned Weiss that
Morgenthau might treat him as harshly as he was treating some of
the board of General Aniline and Film. On February 23, Hill re¬
turned again and Weiss was still installed. Hill screamed at Weiss
that for the company’s own good he must leave at once. On March
10, Hill made a fourth trip to Wheeling and nothing had been done.
Weiss had taken off to Arizona on a vacation, leaving his office in¬
tact. Hill shouted at Weiss’s secretary, who refused to move her
boss’s belongings. Hill thereupon ordered the plant superintendent
to remove the secretary and the remainder of Weiss’s effects from

THE FILM CONSPIRACY

169

the premises in twenty-four hours. His instructions were carried
out.

When Weiss returned, he was devastated to see what had hap¬
pened. Completely blackballed, he became a kind of ghost, walking
or driving meaninglessly around Wheeling for eighteen months. In
March 1943 he drove his car head on into another and was killed
instantly.

The new management of Sterling was almost as unsatisfacto¬
ry—except for James Hill. Earl McClintock, who had so coolly fed
his own colleague to the wolves, stayed on. Meanwhile, some three
weeks after Weiss’s resignation, on December 31, U.S. Military In¬
telligence had intercepted a cable from the Sterling headquarters
to Mexico City and Venezuela stating under the heading Top Secret,
“In order that shipments ... be afforded greater security, it is re¬
quested that you designate different consignees which are perfectly
neutral, and to whom we will ship the goods in lots of 40 or 50 cases
after repacking in neutral packing cases following a period of stor¬
age in a warehouse. It is possible for us to obtain consignments in
the Western coast ports to avoid having U.S. espionage be able to
ask in pursuing the matter the transportation route of the consign¬
ment.”

The cable was examined in Washington, but the consignments
were not discontinued. On February 4, 1942, J. Edgar Hoover sent
a private memorandum to Under Secretary of State Adolf Berle
with a report on the Sterling operation in Chile. He revealed that
Werner Siering of the local operation was head of the espionage ser¬
vice in that country. Hoover wrote, “Not only does this group keep
careful files on the principal opponents of Nazism, but checks on
each German citizen to test his loyalty to Hitler. This organization
has agents in all American-controlled copper mines, the American
and British-controlled night raid works, as well as in large chemical
and financial houses. Through these agents they keep check on all
important economic developments.” The report continues at great
length to disclose that Siering and his corporation had aided Ger¬
man crewmen of the scuttled German battleship Admiral GrafSpee
to escape from prison and go by Japanese ship to Japan.

Siering also worked with local Nazi officials to collect informa¬
tion on the political and economic situation, the activities of Chile’s
leaders, the production of miners in Chile and Bolivia, general con-

170

TRADING WITH THE ENEMY

ditions in industry and commerce, maritime and military move¬
ment.

In April 1942, Morgenthau’s staff investigated Sterling’s head¬
quarters in Manhattan. The investigative team found that a man
who for sixteen years had worked for I.G. Farben was still employed
as an executive. The team found that an attorney who had been ex¬
ecutive vice-president of General Aniline and Film had continued
to represent Sterling on its legal staff until February.

On May 28, 1942, the Lima, Peru, manager of Sterling wrote to
his Buenos Aires office stating that the Peruvian government was
suspicious of Sterling’s operations and wanted to control its business
dealings. The letter stated that no such control would be permitted.
No interference with Sterling’s dealings with Proclaimed List na¬
tionals would be tolerated.

On August 27, 1942, Phillip W. Thayer, senior economic assis¬
tant of the American Embassy at Santiago, Chile, wrote to Mario
Justiniano, manager of the Sterling laboratories in that city, urging
Sterling to collect “the sum of 500,827 pesos, the equivalent of
$14,861.81 which is owed you by Quimica Bayer, of Santiago, a
branch of I.G. Farben.’’ Thus, an official of the U.S. government
authorized a branch of a New York company to collect money from
a Nazi corporation in time of war. The note continues with the
words: “It would also be very much appreciated if you will inform
us as to the steps which are now being taken by your firm in the
United States to obtain the necessary commission and the license
to effect this cooperation.”

On August 30, 1942, Justiniano wrote to the Securities and Ex¬
change Control Commission in Washington to seek the license. He
informed the SECC that there would be a problem in getting the
money. He would have to obtain it through the German-owned
Banco Aleman Transatlantic© in Buenos Aires. He wanted to avoid
this transference because of the unfavorable attention that a disclo¬
sure of it might cause. He advised SECC that his lawyer had ap¬
proached Bayer to obtain payment in Chilean pesos and cash. The
money came from the Banco Aleman Transatlantic© and was trans¬
ferred to a Chilean bank.

Justiniano sent McClintock a copy of the letter to the SECC. Mc-
Clintock immediately cabled him that the arrangement was unac¬
ceptable and that Sterling must approach the Banco Aleman direct

THE FILM CONSPIRACY

171

Thus, McClintock personally authorized an arrangement with the
enemy.

There was some delay in getting a response from Washington.
The detailed interoffice memoranda between Treasury and State
make interesting reading. Justiniano was complaining that he was
having difficulties getting letters through to New York so that the
long delay could be checked on by head office. He seemed to think
that some foreign intelligence service must have intercepted the
mail. Treasury checked into the matter and found that in fact letters
were coming through safely but perhaps Justiniano was afraid of
their being seen. State wavered, then finally agreed to the transac¬
tion.

On November 4, 1943, Dudley G. Dwyre, legal counsel of the
U.S. Embassy in Montevideo, Uruguay, reported to State that Ster¬
ling in that country was utterly failing to meet its agreements with
the U.S. government to desist from trading with the enemy. Ster¬
ling’s local branch was still using Nazi trademarks and retaining
Nazi employees, every one of whom had worked for Bayer, in defi¬
ance of the Consent Decree. Indeed, a local Sterling executive had
been hired from Bayer, which he also had run. The Sterling labora¬
tories were still part-owned by Proclaimed List firms. A local lawyer
for Sterling’s subsidiary was a known Nazi.

Various dispatches from embassies throughout 1943 assert that
McClintock actually bribed Chilean government officials to enable
him to continue business connections with the Nazis. That same
year a Treasury team arrived in South America to investigate Ster¬
ling from Panama to Cape Horn. In many areas Sterling had done
much to clean house, transferring patents and products to American
ownership from Bayer management. But the pockets of collusion
and collaboration—chiefly in Uruguay and Chile—survived.

Norman Littell, antitrust lawyer in the Attorney General’s De¬
partment, spent most of the war years fighting Sterling and its pro¬
tections within the U.S. government. He was appalled by the in¬
fringements of the Consent Decree and he was upset by the fact that
the famous Tommy Corcoran was handling Sterling. He felt that
Corcoran exercised too great an influence on Attorney General
Francis Biddle. He was aggravated by a statement Biddle made to
The New York Times on September 6, 1941, a statement that Littell
felt showed Biddle’s weakness and vacillations and lies to protect

172

TRADING WITH THE ENEMY

the corporation: ‘‘Sterling Products has always been a wholly Amer¬
ican company, and none of the profits of the sale of Bayer Aspirin
has been shared among foreign investors. Similarly, none of the do¬
mestic American products or achievement of the Bayer Company
was involved in relations with I.G. Farben nor is there any foreign
interest in the numerous other subsidiaries of Sterling Products en¬
gaged in the proprietary medicine field.”

Another bugbear of Littell’s was Alien Property Custodian Leo
T. Crowley, who, as apart of the ‘‘house cleaning” of Sterling, took
over the Bayer patents for Atabrine. This substitute for quinine was
indispensable during quinine shortages caused by the Japanese sei¬
zure of Malay and the Dutch East Indies. Without quinine, or Ata¬
brine, thousands of young Americans died of malaria on the tropical
warfronts.

Through 1942, Littell tried desperately with the help of the for¬
mer American I.G. employee Howard Ambruster to persuade
Crowley to release Atabrine for use by American soldiers. Crowley
refused. Meanwhile, as hitherto classified documents show, the Ata¬
brine was freely distributed from heavy stockpiles or even from new
supplies through Proclaimed List customers in South America.

The Atabrine story leaked to I. F. Stone and others of the press,
who backed Littell and Ambruster in an all-out assault on Crowley.
Owing to their pressure Senator Homer T. Bone, chairman of the
Senate Patents Committee, announced that there would be a
full-scale hearing on Atabrine. But the hearing was postponed again
and again. Despite the fact that Biddle had thousands of documents
proving the suppression of Atabrine, he refused to move on the evi¬
dence. The matter dragged on until August, when at last a hearing
began; but it was quickly suspended when five members of the pat¬
ents committee refused to discuss the matter.

In August 1942, Thurman Arnold of the Department of Justice
Antitrust Division wrote in The Atlantic Monthly: ‘‘The spectacle
of the production of this essential drug, left so long to the secret
manipulation of a German-American combination during a period
when Germany was preparing for war against us, is too shocking
to need elaboration.”

In March 1943, Ambruster went to see Earl G. Harrison, new
head of the Immigration and Naturalization Service. He brought
with him a list of every American simultaneously connected to Ster-

THE FILM CONSPIRACY

173

ling Products and Proclaimed List companies. He demanded to
know why none of these people had been interned, denaturalized,
or deported. Harrison told him that Immigration was forbidden to
discuss the subject. Ambruster asked for a regulation upon which
that refusal might be based. He was told that no such regulation
would be supplied.

Ambruster now wrote to Assistant Attorney General Wendell
Berge. Berge was in charge of the Criminal Division of the Depart¬
ment of Justice. He asked the same questions. There was no reply.
Berge said later on the telephone,” I am not permitted to reply to
your inquiries.”

Assistant Attorney General Littell became so persistent a gadfly
that on November 18, 1944, Roosevelt, under pressure from Littell's
enemies, called for the young man's resignation. Instead of tender¬
ing it, Littell wrote a 15,000-word blast, exposing the intricate con¬
nections between Sterling, Tommy Corcoran, and the enemy. Bid¬
dle insisted Roosevelt fire Littell. Roosevelt hesitated. He dreaded
personal confrontations of any kind. But Biddle finally won. Roose¬
velt dismissed Littell for insubordination, saying, “When statements
made by Norman Littell [criticizing the government] first appeared
in the papers I put it to him . . . that I hoped for his future career
he would resign. . . . Under the circumstances my only alternative
is to remove him from office, which I have done today.”

In 1945, Littell at last found support in Congress. Representatives
A1 Smith of Wisconsin, and Jerry Voorhis of California entered Lit-
tell’s charges against Sterling in the Congressional Record on Janu¬
ary 22 of that year, demanding a full-scale investigation. The inves¬
tigation never took place. Within a few days of the resolution being
entered, it was removed from the agenda, and Biddle quietly re¬
signed, ironically taking up the post of prosecutor at the Nuremberg
Trials immediately afterward.

Just before Roosevelt died, the ailing President asked to see Lit¬
tell, who recalls that in a charged meeting in the Oval Office he told
the young man he would like to have seen Biddle impeached for
treason but the difficulties were too great in his grievous physical
condition. Littell asked Roosevelt why Biddle, of all people, was
a judge at Nuremberg. Roosevelt did not reply.

\ .

The Car Connection

William Weiss’s partner in General Aniline and Film, Edsel Ford,
whose father, Henry Ford, was chairman of the Ford empire, played
a complex part in The Fraternity’s activities before and during
World War II. The Ford chairman in Germany, in charge of all
Ford operations after Pearl Harbor, was Dr. Heinrich Albert, part¬
ner until 1936 of Gerhardt Westrick in the law firm associated with
the Dulles brothers—Sullivan and Cromwell.

Henry Ford was once ranked in popular polls as the third greatest
man in history: just below Napoleon and Jesus Christ. His wealth
may be gauged by the fact that when young Edsel turned twen¬
ty-one, the father took the boy into a private vault and gave him
$1 million in gold. Henry Ford controlled more than half of the
American automobile market by 1940: in the early years of the cen¬
tury, his famous Model T, the chariot of the common man, revolu¬
tionized the nation.

Lean and hard as a Grant Wood farmer, Henry Ford was a knotty
puritan, dedicated to the simple ideals of early-to-bed, early-to-rise,
plain food, and no adultery. He didn’t drink and fought a lifetime
against the demon tobacco.

He admired Hitler from the beginning, when the future Fiihrer
was a struggling and obscure fanatic. He shared with Hitler a fanati¬
cal hatred of Jews. He first announced his anti-Semitism in 1919,
in the New York World, when he expressed a pure fascist philoso¬
phy. He said, “International financiers are behind all war. They are
what is called the international Jew: German-Jews, French-Jews,
English-Jews, American-Jews . . . the Jew is a threat.’’

In Germany, Hitler was uttering identical sentiments. In 1920,
Ford arranged for his Dearborn Independent , first published in
1918, to become a platform for his hatred of the Jews. Week after
week the newspaper set out to expose some horror of Jewish misbe¬
havior. The first anti-Semitic issue on May 22 carried the headline
THE INTERNATIONAL JEW: THE WORLD’S PROBLEM. The leading

175

176

TRADING WITH THE ENEMY

article opened with the words “There is a race, a part of humanity,
which has never been received as a welcome part...” and continued
in the same vein to the end. A frequent contributor was a fanatical
White Russian, Boris Brasol, who boasted in one piece: “I have done
the Jews more injury than would have been done to them by ten
pogroms.”

Brasol was successively an agent of the Czar and of the U.S.
Army Intelligence; later he became a Nazi spy.

Ford’s book The International Jew was issued in 1927. A virulent
anti-Semitic tract, it was still being widely distributed in Latin
America and the Arab countries as late as 1945. Hitler admired the
book and it influenced him deeply. Visitors to Hitler’s headquarters
at the Brown House in Munich noticed a large photograph of Henry
Ford hanging in his office. Stacked high on the table outside were
copies of Ford’s book. As early as 1923, Hitler told an interviewer
from the Chicago Tribune, “I wish that I could send some of my
shock troops to Chicago and other big American cities to help.”
He was referring to stores that Ford was planning to run for Presi¬
dent.

Ford was one of the few people singled out for praise in Mein
Kampf. At Hitler’s trial in 1924, Erhard Auer of the Bavarian Diet
testified that Ford had given Hitler money. Ford formed crucial
links in The Fraternity at an early stage. He appointed Gerhardt
Westrick’s partner Dr. Heinrich Albert as chairman of the Ford
Company. Other prominent figures in that company were fanati¬
cally pro-Nazi. They included a grandson of the Kaiser and Carl
Bosch, Schmitz’s forerunner as head of I.G. Farben. Later, Carl
Krauch of I.G. Farben became a director and Kurt von Schroder,
as one might have predicted, handled the banking.

Carl Krauch testified in an interrogation in 1946:

I myself knew Henry Ford and admired him. I went to see Go¬
ring personally about that. I told Goring that I myself knew
his son Edsel, too, and I told Goring that if we took the Ford
independence away from them in Germany, it would aggrieve
friendly relations with American industry in the future. I
counted on a lot of success for the adaptation of American
methods in Germany’s industries, but that could be done only
in friendly cooperation. Goring listened to me and then he said:

THE CAR CONNECTION

177

“I agree. I shall see to it that the German Ford Company will
not be incorporated in the Hermann Goring Company.” So I
participated regularly in the supervisory board meetings to in¬
form myself about the business processes of Henry Ford and,
if possible, to take a stand for the Henry Ford Works after the
war had begun. Thus, we succeeded in keeping the Ford Works
working and operating independently of our government’s sei¬
zure.

Edsel Ford had a great deal to do with the European companies.
He was different in character from his father. He was a nervous,
high-strung man who tried to work off his extreme tensions and
guilts over inherited wealth in a furious addiction to tennis and
other sports. Darkly handsome, with a whipcord physique, he was
miserable at heart. He could not relate to his father, who despised
him, and his inner distress caused him severe stomach ulcers that
developed into gastric cancer by the early 1940s. Nevertheless, he
and his father had one thing in common. True figures of The Fa-
temity, they believed in Business as Usual in time of war.

Edsel was on the board of American I.G. and General Aniline
and Film throughout the 1930s. He and his father, following their
meetings with Gerhardt Westrick at Dearborn in 1940, refused to
build aircraft engines for England and instead built supplies of the
5-ton military trucks that were the backbone of German army trans¬
portation. They arranged to ship tires to Germany despite the short¬
ages; 30 percent of the shipments went to Nazi-controlled territories
abroad. German Ford employee publications included such edito¬
rial statements as, “At the beginning of this year we vowed to give
our best and utmost for final victory, in unshakable faithfulness to
our Fuehrer.” Invariably, Ford remembered Hitler’s birthday and
sent him 50,000 Reichsmarks a year. His Ford chief in Germany
was responsible for selling military documents to Hitler. Westrick’s
partner Dr. Albert continued to work in Hitler’s cause when that
chief came to the United States to continue his espionage. In 1941,
Henry Ford delivered a bitter attack on the Jews to The Manchester
Guardian (February 16, 1941) saying inter alia, that the United
States should make England and Germany fight until they both col¬
lapsed and that after that there would be a coalition of the powers.

And in 1941 he hired Charles Lindbergh as a member of his exec-

178

TRADING WITH THE ENEMY

utive staff. Lindbergh had been one of the most vocal supporters
of Hitler. Indeed, the advent of Pearl Harbor made no difference
to Lindbergh’s attitude. On December 17, 1941, ten days after the
Japanese attack, Lindbergh said to a group of America Firsters at
the home of prominent businessman Edwin S. Webster in New
York,

There is only one danger in the world—that is the yellow dan¬
ger. China and Japan are really bound together against the
white race. There could only have been one efficient weapon
against this alliance. . , . Germany. . . . the ideal setup would
have been to have had Germany take over Poland and Russia,
in collaboration with the British, as a bloc against the yellow
people and Bolshevism. But instead, the British and the fools
in Washington had to interfere. The British envied the Ger¬
mans and wanted to rule the world forever. Britain is the real
cause of all the trouble in the world today.*

While Lindbergh took over as consultant, Edsel Ford began to
concentrate on insuring that his interests in France would not be
affected following the German invasion. Management of the Ford
interests was in the hands of the impressively handsome and elegant
Paris financier Maurice Dollfus, who had useful contacts with the
Worms Bank and the Bank for International Settlements. Although
he had little knowledge of manufacturing processes, Dollfus sup¬
plied much of the financing for the new sixty-acre Ford automobile
factory at Possy, eleven miles from Paris in the Occupied Zone.
Under Dollfus the Poissy plant began making airplane engines in
1940, supplying them to the German government. It also built
trucks for the German army, as well as automobiles. Carl Krauch
and Hermann Schmitz were in charge of the operation from their
headquarters in Berlin along with Edsel Ford at Dearborn.

After Pearl Harbor, Edsel Ford moved to protect the company’s
interest in Occupied France, even thought this would mean collabo¬
ration with the Nazi government. Edsel and Dollfus decided to con¬
solidate their operation in conjunction with Carl Krauch, Heinrich
Albert, and Gerhardt Westrick in Germany. The problem they had

•FBI report, December 18, 1941.

THE CAR CONNECTION

179

was how to keep in touch, since their two countries were at war.
In order to overcome this difficulty, Edsel traveled to Washington
at the beginning of 1942 and entered into an arrangement with As¬
sistant Secretary of State Breckinridge Long, who simultaneously
was blocking financial aid to German-Jewish refugees by citing the
Trading with the Enemy Act. Long agreed that it should be possible
for letters to travel to and from Occupied France via Lisbon and
Vichy. Since it would be too dangerous to risk the letters falling into
the hands of the press or foreign agents, they would have to be car¬
ried by a Portuguese courier named George Lesto who, with clear¬
ance from the Nazi government, was permitted to travel in and out
of Paris.

On January 28, 1942, Dollfus sent the first letter after Pearl Har¬
bor to Edsel Ford in Dearborn, Michigan via the Portuguese courier
Lesto. Dollfus wrote that, “Since the state of war between U.S.A.
and Germany I am not able to correspond with you very easily. I
have asked Lesto to go to Vichy and mail to you the following infor¬
mation.” He added that production was continuing as before, that
trucks were being manufactured for the occupying Germans and
the French, and that Ford was ahead of the French automobile
manufacturers in supplying the enemy. Dollfus said he was getting
support from the Vichy government to preserve the interests of the
American shareholders and that a company in North Africa was
being founded for the Nazis with ground plots in Oran. Amazingly,
the letter concluded by saying, “I propose to send again Mr. Lesto
to the States as soon as all formalities and authorizations are accom¬
plished.”

Edsel replied at length on May 13: “It is interesting to note that
you have started your African company and are laying plans for
a more peaceful future.” He went on, “I have received a request
from the State Department to make a recommendation for issuance
of a visa to Mr. Lesto.” However, the letter went on, Ford was un¬
easy about making the request; it was clear that he was nervous
about the matter being disclosed.

The Royal Air Force, apparently not briefed on the world con¬
nections of The Fraternity, had just bombed the Possy plant. Ford
wrote on May 15 that photographs of the plant on fire were pub¬
lished in our newspapers, here but fortunately no reference was made
to the Ford Motor Company. In other words, Edsel was relieved

180

TRADING WITH THE ENEMY

that it was not made clear to the American public that he was oper¬
ating the plant for the Nazis.

On February 11, 1942, Dollfus wrote again—that the results of
the year up to December 31, 1941, showed a net profit for Ford’s
French branch of 58 million francs including payment for dealings
with the Nazis.

On June 6, Dollfus wrote Edsel enclosing a memorandum pre¬
pared by George Lesto. The memo stated that the RAF had now
bombed the plant four times, and that all machinery and equipment
had been taken from the plant and scattered all over the country.
Lesto was pleased to state that the Vichy government “agreed to
pay for all damages.” The reparation was “approved by the German
government.” Ford replied to this letter on July 17, 1942, expressing
pleasure with this arrangement, congratulating Lesto on organizing
the repayment, and saying that he had shown the letter to his father
and to Charles E. Sorenson, and that they both joined him in send¬
ing best wishes to Dollfus and the staff, in the hope that they would
continue to carry on the good work that they were doing.

Meanwhile, Dollfus and Heinrich Albert set up another branch
of Ford in North Africa, headquartered in Vichy Algiers with the
approval of I.G. Farben. It was to build trucks and armored cars
for Rommel’s army. In a lengthy report to the State Department
dated July 11, 1942, Felix Cole, American Consul in Algiers, sent
a detailed account of the planned operation, not complaining that
the headquarters was located in the Occupied Zone of France or
that Dollfus was prominent in the Pucheu* group of bankers that
financed the factory through the Worms Bank, the Schroder Bank,
and BIS correspondent in Paris. Cole remarked en passant, “The
[Worms] firm is greatly interested in the efforts now being made
to effect a compromise peace on behalf of Germany.” Cole had put
his finger on something: Dollfus was more than a mere Nazi collabo¬
rator working with Edsel Ford. He was a key link in The Fraterni¬
ty’s operation in Europe, scheming with Pucheu, the Worms Bank,
the Bank of France, the Chase, and the Bank for International Set¬
tlements.

•Pierre Pucheu, Vichy Minister of the Interior, who helped to leak the secret
of Eisenhower’s North African invasion plan to the Nazis and was executed
by the Free French for treason in 1944.

THE CAR CONNECTION

181

The letter from Cole went on: “It is alleged that the main outlets
for the new works [in Oran] will be southwards, but the population
which is already getting plenty of propaganda about the collabora¬
tion of French-German-American capital and the questionable (?)
sincerity of the American war effort* is already pointing an accusing
finger at a transaction which has been for long a subject of discus¬
sion in commercial circles.”

Dollfus wrote again on August 15, 1942; the letter reached Edsel
Ford two weeks later. Dollfus stated that following the RAF bomb¬
ing, production had been resumed in France at the same rate; that
he was not permitted to say where the new plants were to which
production had been disbursed but that they were four of the princi¬
pal plants. He went on, “Machinery has been overhauled and re¬
paired and some new machinery purchased so that the capital in
machinery and equipment is completely restored to its pre-bombing
status. I have named a manager in each plant and the methods and
standards are the same as they were in Possy. Essential repairs have
been started at Poissy but work is slow because of the difficulty in
obtaining materials.”

In the rest of a very long letter, Dollfus pointed out that at this
stage the Poissy and other works came directly under Dr. Heinrich
Albert and a German officer named Tannen, in trust, “Mr. Tannen
has in turn given me back most of the powers that I used to have
previously to run our business, with the exception of certain ones
that he does not hold himself, and some others which I believe
should have been given me but anyhow they are not indispensable
for me to continue to run the business normally.” Dollfus added
that Dr. Albert was clearly anxious to play a part “so as to appear
a Good Samaritan after the war in the eyes of the Allies.”

On September 29, 1942, Breckinridge Long wrote to Edsel en¬
closing a letter from Dollfus saying that Vichy’s compensation pay¬
ment to Ford to the tune of 38 million francs had been received.
On October 8, Ford sent a letter of thanks

In April 1943, Morgenthau and Lauchlin Currie conducted a
lengthy investigation into the Ford subsidiaries in France, conclud¬
ing that “their production is solely for the benefit of Germany and
the countries under its occupation” and that the Germans have

♦Author’s italics.

182

TRADING WITH THE ENEMY

“shown clearly their wish to protect the Ford interests’* because of
the “attitude of strict neutrality” maintained by Henry and Edsel
Ford in time of war. And finally, “the increased activity of the
French Ford subsidiaries on behalf of Germans receives the com¬
mendation of the Ford family in America.”

Despite a report running to hundreds of thousands of words and
crammed with exhaustive documentation including all the relevant
letters, nothing whatsoever was done about the matter.

Meanwhile, Ford had gone on making special deals. On May 29,
1932, the Ford Motor Company in Edgewater, New Jersey, had
shipped six cargoes of cars to blacklisted Jose O. Moll of Chile. An¬
other consignee was a blacklisted enemy corporation, Lilienfeld, in
Bolivia. On October 20, 1942, John G. Winant, U.S. Ambassador
to London, coolly reported to Dean Acheson that two thousand
German army trucks were authorized for repair by the Ford motor
works in Berne. On the same day, Winant reported that the British
Legation and the U.S. authorities recommended the Ford Motor
Company of Belgium be blacklisted because its Zurich branch, on
U.S. orders, was repairing trucks and converting the use of gasoline
for trucks and cars of the German army in Switzerland.

In December 1943 a further report from Minister Leland Harri¬
son in Berne said, “The Ford Motor Company in Zurich, acting
for Cologne, supplies spare parts for the repair of Ford trucks and
passenger cars to U.S. Ford Motor Company agents in Switzerland.
Some of these parts are imported, which provides the enemy with
clearing funds.” Thus, one year after these matters were reported
in Washington, trading with the enemy was continuing. All Swiss
operations functioned under the guidance of Ford’s Charles E.
Sorenson.

Edsel died of cancer in 1943, but Sorenson went on with the deal¬
ings. On November 6, 1945, Maurice Dollfus, enemy collaborator,
traveled to New York (by U.S. Army Air Transport Command) and
gave an interview to The New York Times at the Ritz-Carlton Hotel.
He discussed his operation during the war, but apparently nobody
on the New York Times staff thought to question him on the nature
of that operation, which remained a complete secret to the Ameri¬
can public.

General Motors, under the control of the Du Pont family of Dela-

THE CAR CONNECTION

183

ware, played a part in collaboration comparable with Ford’s. Gen¬
eral Aniline and Film had heavy investments in the company.

Irenee du Pont was the most imposing and powerful member of
the clan. He was obsessed with Hitler’s principles. He keenly fol¬
lowed the career of the future Fiihrer in the 1920s, and on Septem¬
ber 7, 1926, in a speech to the American Chemical Society, he advo¬
cated a race of supermen, to be achieved by injecting special drugs
into them in boyhood to make their characters to order. He insisted
his men reach physical standards equivalent to that of a Marine and
have blood as pure as that in the veins of the Vikings. Despite the
fact that he had Jewish blood in his own veins, his anti-Semitism
matched that of Hitler.

Between 1932 and 1939, bosses of General Motors poured $30
million into I.G. Farben plants with the excuse that the money
could not be exported. On several visits with Hermann Schmitz and
Carl Krauch of Farben in Berlin in 1933, Wendell R. Swint, Du
Pont’s foreign relations director, discovered that I.G. and the gigan¬
tic Krupp industrial empire had arranged for all Nazi industry to
contribute one half percent of its entire wage and salary roll to the
Nazis even before they rose to power. Thus, Swint (who testified
to this effect at the 1934 Munitions Hearings) admitted under oath
that Du Pont was fully aware it was financing the Nazi party
through one half percent of its Opel wages and salaries as well as
through its deals with I.G. and its building of armored cars and
trucks.

Simultaneously with the rise of Hitler, the Du Ponts in 1933
began financing native fascist groups in America, including the
anti-Semitic and antiblack American Liberty League and the orga¬
nization known as Clark’s Crusaders, which had 1,250,000 mem¬
bers in 1933. Pierre, Irenee,, and Lammot du Pont and John Jacob
Raskob funded the Liberty League, along with Alfred P. Sloan of
General Motors. The League smeared Roosevelt as a communist,
claimed the President was surrounded by Jews; and Respite the fact
that they were Jewish, the Du Ponts smeared Semitic organizations.

The connections between General Motors and the Nazi govern¬
ment began at the moment of Hitler’s rise to power. Goring declined
to annex General Motors and indeed received with pleasure William
S. Knudsen, General Motors’ president, who returned on October

184

TRADING WITH THE ENEMY

6, 1933, to New York telling reporters that Germany was “the mira¬
cle of the twentieth century."

Early in 1934, Irenee du Pont and Knudsen reached their explo¬
sion point over President Roosevelt. Along with friends of the Mor¬
gan Bank and General Motors, certain Du Pont backers financed
a coup d’etat that would overthrow the President with the aid of
a $3 million-funded army of terrorists, modeled on the fascist move¬
ment in Paris known as the Croix de Feu. Who was to be the figure¬
head for this ill-advised scheme, which would result in Roosevelt
being forced to take orders from businessmen as part of a fascist
government or face the alternative of imprisonment and execution?
Du Pont men allegedly held an urgent series of meetings with the
Morgans. They finally settled on one of the most popular soldiers
in America, General Smedley Butler of Pennsylvania. Butler, a
brave hero, had been awarded two Congressional Medals of Honor
and his brilliant career as commandant of the Marine Corps had
made him a legend. He would, the conspiratorial group felt, make
an ideal replacement for Roosevelt if the latter proved difficult.
These business chiefs found great support for their plan in Hermann
Schmitz, Baron von Schroder, and the other German members of
The Fraternity.

The backers of the bizarre conspiracy selected a smooth attorney,
Gerald MacGuire, to bring word of the plan to General Butler.
MacGuire agreed Butler would be the perfect choice. Butler had
attacked the New Deal in public speeches.

MacGuire met with Butler at the latter’s house in Newton
Square, Pennsylvania, and in a hotel suite nearby. With great inten¬
sity the fascist attorney delivered the scheme to the general. Butler
was horrified. Although there were many things about Roosevelt
he disliked, a coup d’etat amounted to treason, and Butler was noth¬
ing if not loyal to the Constitution. However, he disclosed nothing
of his feelings. With masterful composure he pretended interest and
waited to hear more.

When MacGuire returned, it was with news of more millions and
more extravagant plans, which included turning America into a dic¬
tatorship with Butler as a kind of Hitler. Once more Butler was infu¬
riated but kept quiet. After MacGuire left on the second occasion,
the general got in touch with the White House. He told Roosevelt
of the entire plan.

THE CAR CONNECTION

185

Roosevelt’s state of mind can scarcely be imagined. He knew that
in view of the backing from high banking sources, this matter could
not be dismissed as some crackpot enterprise that had no chance
of success. He was well aware of the powerful forces of fascism that
could easily make America an ally of Nazism even that early, only
one year after Hitler had risen to power.

On the other hand, Roosevelt also knew that if he were to arrest
the leaders of the houses of Morgan and Du Pont, it would create
an unthinkable national crisis in the midst of a depression and per¬
haps another Wall Street crash. Not for the first or last time in his
career, he was aware that there were powers greater than he in the
United States.

Nevertheless, the plan had to be deactivated immediately. The
answer was to leak it to the press. The newspaper ran the story of
the attempted coup on the front page, but generally ridiculed it as
absurd and preposterous. When Thomas Lamont of the Morgan
Bank arrived from Europe by steamer, he was asked by a crowd
of reporters to comment. “Perfect moonshine! Too utterly ridicu¬
lous to comment upon!” was the reply.

Roosevelt couldn’t quite let the matter rest. Under pressure from
liberal Democrats he set up a special House committee to investi¬
gate. Butler begged the committee to summon the Du Ponts but
the committee declined. Nor would it consent to call anyone from
the house of Morgan. Then Butler dropped a bombshell. He gave
interviews to the press announcing that none other than General
Douglas MacArthur was a party to the plot. This again was dis¬
missed by the press, and MacArthur laughed it off.

The committee hearings were a farce. MacGuire was allowed to
get away with saying that Butler had “misunderstood” his inten¬
tions. Other witnesses lamely made excuses, and there the matter
rested.

It was four years before the committee dared to publish its report
in a white paper that was marked for “restricted circulation.” They
were forced to admit that “certain persons made an attempt to es¬
tablish a fascist organization in this country . . . [The] committee
was able to verify all the pertinent statements made by General But¬
ler.” This admission that the entire plan was deadly in intent was
not accompanied by the imprisonment of anybody. Further investi¬
gations disclosed that over a million people had been guaranteed

186

TRADING WITH THE ENEMY

to join the scheme and that the arms and munitions necessary would
have been supplied by Remington, a Du Pont subsidiary.

The Du Ponts* fascistic behavior was seen in 1936, when Irenee
du Pont used General Motors money to finance the notorious Black
Legion. This terrorist organization had as its purpose the prevention
of automobile workers from unionizing. The members wore hoods
and black robes, with skull and crossbones. They fire-bombed union
meetings, murdered union organizers, often by beating them to
death, and dedicated their lives to destroying Jews and communists.
They linked to the Ku Klux Klan. Irenee du Pont encouraged Gen¬
eral Motors foremen to join the Legion. In one episode a Detroit
worker, Charles Poole, was brutally murdered by a gang of Black
Legionists, several of whom belonged to the sinister Wolverine Re¬
publican League of Detroit. This organization had as its members
several in big business. However, their names were kept out of the
papers during the Poole case trial. It was brought out that at least
fifty people, many of them blacks, had been butchered by the Le¬
gion, which swept through General Motors factories and had 75,000
members.

At the same time, the Du Ponts developed the American Liberty
League, a Nazi organization whipping up hatred of blacks and Jews,
love of Hitler, and loathing of the Roosevelts. Financed by Lammot
and Irenee to the tune of close to $500,000 the first year, the Liberty
League had a lavish thirty-one-room office in New York, branches
in twenty-six colleges, and fifteen subsidiary organizations nation¬
wide that distributed fifty million copies of its Nazi pamphlets. In
September 1936, while Hitler at Nuremberg expressed his grand de¬
sign for the Four-Year Plan, the Du Ponts and the American Lib¬
erty League poured thousands into backing Republican Alf Landon
against Roosevelt in the election. Other backers were the American
Nazi party and the German-American Bund.

The attempt to launch Landon failed, which made the Du Ponts
hate Roosevelt even more. In outright defiance of Roosevelt’s desire
to improve working conditions for the average man, Knudsen of
General Motors along with the Du Ponts instituted the speedup sys¬
tems created by another prominent figure of The Fraternity, Charles
Bedaux. These forced men to work at terrifying speeds on the as¬
sembly lines. Many died of the heat and the pressure, increased by
fear of losing their jobs at a time when there were very few available.

THE CAR CONNECTION

187

Irenee personally paid almost $1 million from his own pocket for
armed and gas-equipped storm troops modeled on the Gestapo to
sweep through the plants and beat up anyone who proved rebellious.
He hired the Pinkerton Agency to send its swarms of detectives
through the whole chemicals, munitions, and automobile empire to
spy on left-wingers or other malcontents.

By the mid-1930s, General Motors was committed to full-scale
production of trucks, armored cars, and tanks in Nazi Germany.
The GM board could be guaranteed to preserve political, personal,
and commercial links to Hitler. Alfred P. Sloan, who rose from
president of GM to chairman in 1937, paid for the National Council
of Clergymen and Laymen at Asheville, North Carolina, on August
12, 1936, at which John Henry Kirby, millionaire fascist lumber¬
man of Texas, was prominent in the delivery of speeches in favor
of Hitler. Others present, delivering equally Hitlerian addresses,
were Governor Eugene D. Talmadge of Georgia and the Nazi Rev¬
erend Gerald L. K. Smith. Sloan frequently visited Berlin, where
he hobnobbed with Goring and Hitler.

Graeme K. Howard was a vice-president of General Motors.
Under FBI surveillance throughout his whole career with the com¬
pany, he was an outright fascist who wrote a poisonous book, Amer¬
ica and a New World Order , that peddled the line of appeasement,
and a virtually identical doctrine to that of Hitler in terms of free
trade and the restoration of the gold standard for the United States
of Fascism in which General Motors would no doubt play a promi¬
nent part.

Another frequent visitor to Germany was the rugged, cheerful,
hearty James D. Mooney, head of the European end of the business,
directly in charge of the Adam-Opel production. On December 22,
1936, in Vienna, Mooney told U.S. diplomat George Messersmith,
who despite his German family origin hated Hitler, “We ought to
make some arrangement with Germany for the future. There is no
reason why we should let our moral indignation over what happens
in that country stand in the way.” In other words, although the
mass of Americans despised the Nazis, business must continue as
usual. Messersmith was furious. He snapped back, “We can hardly
be expected to trade with a country only so that it can get those
articles which it intends to use against the peace of the world.”

In a report of December 23 to the Acting Secretary of State in

188

TRADING WITH THE ENEMY

Washington, Messersmith wrote, “It is curious that Mooney and
Col. Sosthenes Behn ... both give this opinion. The factories owned
by ITT in Germany are running full time and in double shifts and
increasing their capacity for the simple reason that they are working
almost entirely on government orders and for military equipment.
The Opel works, owned by General Motors, are [also] working very
well [in the same way].”

That Christmas, Mooney was in Berlin for talks with Hjalmar
Horace Greeley Schacht to discuss Germany’s and America’s joint
future in the world of commerce. He attracted the hatred of the lib¬
eral U.S. Ambassador to Germany William E. Dodd, who returned
from Berlin to New York in 1937 and referred to The Fraternity
in a shipboard press conference in New York harbor. Dodd was
quoted in The New York Times as saying:

A clique of U.S. industrialists is hell-bent to bring a fascist state
to supplant our democratic government and is working closely
with the fascist regimes in Germany and Italy. I have had
plenty of opportunity in my post in Berlin to witness how close
some of our American ruling families are to the Nazi regime.
On [the ship] a fellow passenger, who is a prominent executive
of one of the largest financial corporations, told me point blank
that he would be ready to take definite action to bring fascism
into America if President Roosevelt continued his progressive
policies.

Dodd’s words were ignored.

On November 23, 1937, representatives of General Motors held
a secret meeting in Boston with Baron Manfred von Killinger, who
was Fritz Wiedemann’s predecessor in charge of West Coast espio¬
nage, and Baron von Tippleskirsch, Nazi consul general and Ge¬
stapo leader in Boston. This group signed a joint agreement showing
total commitment to the Nazi cause for the indefinite future. The
agreement stated that in view of Roosevelt’s attitude toward Ger¬
many, every effort must be made to remove him by defeat at the
next election. Jewish influence in the political, cultural, and public
life of America must be stamped out. Press and radio must be subsi¬
dized to smear the administration, and there must be a flihrer, pref¬
erably Senator Burton K. Wheeler of Montana, in the White House.

THE CAR CONNECTION

189

This agreement was carefuly hidden. But a secretary who was loyal
to the American cause managed to obtain a copy and give it to
George Seldes, liberal journalist, who published it in his newsletter,
In Fact , The patriotic liberal Representative John M. Coffee of
Washington State entered the full agreement, running to several
pages, in the Congressional Record on August 20, 1942, demanding
that the Du Ponts and the heads of General Motors be appropriately
treated. Needless to say, the resolution was tabled permanently.

In 1938, Mooney, like Henry Ford, received the Order of the
Golden Eagle from Hitler. On March 27, 1939, he arrived in En¬
gland to confer with the heads of his British company. He learned
that three of the Adam-Opel staff had been seized by the Gestapo
and charged with leaking secrets of the new Volkswagen to the
United States. Mooney rushed to Berlin and arranged meetings with
one Dr. Meissner, who was in charge of foreign VIPs. Meissner said
that even the Fiihrer could not interfere with Himmler and the SS.
Mooney reminded Meissner of his commitment to the Fiihrer.

Meissner agreed that this trivial matter must not be allowed to
interfere with German-American relations but that the men would
be punished if found guilty. Mooney offered to testify on their be¬
half; on April 6 he went to see one of Himmler’s lieutenants and
on the same day he visited Ribbentrop. But he was powerless to af¬
fect the fate of his employees.

On April 19, Mooney met with the invaluable Emil Puhl of the
BIS and the Reichsbank, and Helmuth Wohlthat, Goring’s Ameri¬
can-educated right-hand man in the Four-Year Plan. Mooney con¬
ferred with these men on Hitler’s basic plan of the massive Ameri¬
can gold loan that would provide the basis for the New Order.
Mooney enthusiastically endorsed the scheme and promised to
bring it about.

In a state of excitement he traveled to London on April 25 to
see Ambassador Joseph Kennedy. Kennedy agreed to meet with
Puhl and Wohlthat in Paris. Mooney talked with Francis Rodd of
Morgan, Grenfell, the British representatives of the Morgan Bank.
They agreed that the loan should be made to Germany through the
Bank for International Settlements. Rodd said significantly that the
BIS provided a flexible medium for avoiding conflict with some of
the internal legal limitations on international loans—a complicated

190

TRADING WITH THE ENEMY

way of saying that the BIS could dodge the law whenever it felt like
it.

Mooney went to Berlin on April 29. On May 1 he urged Puhl
to meet with Kennedy in Paris. He promised to arrange the meeting
secretly at Mooney’s apartment in the Ritz Hotel. Puhl was interest¬
ed. But on the following day he said he dared not make the trip
because it would attract too much attention in Germany and that
Wohlthat should go instead. Wohlthat agreed to go.

On May 3, Mooney called Kennedy in London. Kennedy replied
that he would be willing to come on the weekend of May 5-6. But
he hesitated and asked if Mooney didn’t think it was advisable that
he put the matter up to the White House first. Mooney said he
would only do that in Kennedy’s place if he thought he was a good
enough salesman to get approval. Otherwise it would be taking a
long chance. He added that the arrangements had been accepted
in Berlin and it would not be wise to withdraw at this late hour.

After this conversation, Kennedy panicked. He called Roosevelt,
who told him immediately not to make the trip. Roosevelt knew
the nature of the arrangements in which Mooney was involved.
There was no way he would sanction Kennedy’s involvement.

Kennedy tried to reach Mooney several times. When he finally
got through, Mooney chartered a plane in Brussels and flew to Lon¬
don. The idea of peace was clearly such an obsession he couldn’t
wait. On the plane, he scribbled out his notes on what was needed:
a half to one billion gold loan through the BIS, a restoration of Ger¬
many’s colonies, a removal of embargo on German goods, participa¬
tion in Chinese markets. On Germany’s side there would be arma¬
ments limitations, nonaggression pacts, and free exchange.
Whatever Mooney’s motives, these were pure Nazi objectives, noth¬
ing else.

Mooney went straight to the embassy from his plane and laid out
the points of the peace agreement on Kennedy’s desk. He begged
him to see Wohlthat. Kennedy promised to put pressure on Roose¬
velt once more. Next morning, Mooney found Kennedy deeply de¬
pressed. Kennedy had tried to reach Roosevelt for hours, and when
he had done so, Roosevelt had once again refused him.

Mooney now suggested Wohlthat should come to London. Ken¬
nedy agreed at once. Mooney called Wohlthat in Berlin and asked
him to come to London. Wohlthat obtained permission from Hitler

THE CAR CONNECTION

191

and Goring and arrived at the Berkeley Hotel on May 8, The meet¬
ing was held on May 9, apparently without Roosevelt’s knowledge
or approval. The Nazi economist got along well with Kennedy.
Mooney noted that the two men saw eye-to-eye on everything.
Wohlthat returned to Berlin, promising his help. The press discov¬
ered Wohlthat was in London and played the visit up tremendously
with headlines like “Goring’s mystery man is here.” This greatly
annoyed Mooney, who had assumed the visit was secret.

Roosevelt stepped in as soon as the news was announced and for¬
bade Kennedy to have anything further to do with the arrangement.
Mooney was greatly disappointed by this lack of rapport between
the President and Nazi Germany. It was this series of meetings with
Kennedy and Wohlthat that helped to spawn ITT’s Gerhardt
Westrick’s visit to New York the following year, and it is significant
that Mooney was high on the list of people who received and en¬
couraged Westrick. Roosevelt was greatly aggravated by Mooney
but played along with him in order to see what he was up to.

In the Mooney diaries at Georgetown University in Washington,
there is an eighteen-page document signed by Wohlthat that lays
out Germany’s economic plans. It is quite clear that Mooney was
in total accord with these.

On September 22, 1939, Mooney had a meeting with Roosevelt.
His notes after the meeting, quoting as nearly as possible the actual
words, suggest that Roosevelt was using Mooney to see what Hitler
was up to. Roosevelt pretended he was not interested in telling the
Germans what they should do about Hitler. That Mooney should
remind the Germans that Roosevelt had gone to school in Germany
and had a great many personal friends there. He said he wished Ger¬
many would pipe down about domination of the world. He dis¬
cussed the question of broader distribution of goods in time of peace
and that it ought to be reasonably simple to get around a table with
the proper will and settle problems like Silesia, Poland, Czechoslo¬
vakia, and the general attitude toward Russia. Roosevelt said he
would be glad to offer himself as moderator, that the Pope could
serve a useful purpose in negotiations, and that practical suggestions
must be made satisfactory to Berlin, London, and Paris. He encour¬
aged Mooney to sec Hitler but to be careful in communicating the
results to the White House by telephone.

Armed with this artificial, carefully calculated authorization.

192

TRADING WITH THE ENEMY

Mooney traveled to Europe at the same time as Roosevelt’s official
emissary, Sumner Welles, in March 1940. He was only one day later
than Welles in audience with Hitler on March 4.

Because of the importance of Adam-Opel and the Du Ponts to
the Nazi war machine, Hitler was extremely cordial. Mooney said
that Roosevelt's early days in Germany had remained a nostalgic
recollection; that the President’s attitude to Germany was more san¬
guine and warm than was generally believed in Berlin; that Roose¬
velt would help toward a negotiated peace; that the German report¬
ers ought to emphasize what Germany and America shared
together.

Hitler smiled broadly at these sentiments. He did not want war
with America: he had his hands full enough already. He wanted
America to remain inactive until it either entered the Axis or was
conquered. Hitler said he was delighted to hear Roosevelt’s view¬
point and that Roosevelt had constructively undertaken the tasks
of the presidency. He suggested that Roosevelt would be well placed
to negotiate peace. These statements were as calculated to deceive
Mooney as Roosevelt’s.

From the Chancellery, Mooney proceeded to the Air Ministry
to see Goring, who later had him to dinner at Karin Hall. Goring
played out a similar line of lies, denying among other things that
Germany had any desire to affect the British colonial empire when
in fact one of Hitler’s burning obsessions was to retrieve his lost col¬
onies. Wohlthat also attended the meeting at Goring’s house, and
everyone concurred that the gold loan must once again be pushed
by Mooney with the President.

From a warship off the Italian coast in March, Mooney beseeched
Roosevelt with a stream of messages calling for peace and unison
with Hitler. On April 2, Roosevelt wrote to Mooney that public
opinion in America was all for peace and disarmament.

Back in New York, Mooney met with Gerhardt Westrick, and
joined that party at the Waldorf-Astoria in which some American
leaders of The Fraternity, including Sosthenes Behn and Torkild
Rieber, celebrated the Nazi conquest of France. On June 27 the
Nazi consul general in New York and local Gestapo chief, Hein¬
rich Borchers, sent a report prepared by Westrick to Ribbentrop.
It read:

THE CAR CONNECTION

193

A group of prominent businessmen and politicians whom I per¬
sonally regard as reliable in every way, and those influence I
consider to be very great, but who, in the interest of our opera¬
tion, do not want tot be mentioned in any circumstances at this
time, suggested that I convey to the Foreign Ministry the fol¬
lowing: the aforesaid group, which has the approval and sup¬
port of a substantial number of leading personalities, will
shortly urge upon President Roosevelt the following recom¬
mendations: 1. Immediate sending of an American Ambassa¬
dor to Berlin. 2. A change of Ambassadors in London. 3. Sus¬
pension of armament shipments to Great Britain until the new
Ambassador to Berlin has had an opportunity to discuss mat¬
ters with the German government.

On July 18, Hans Thomsen, charge d’affaires in Washington, wrote
to Berlin that this group was headed by James D. Mooney. Thom¬
sen went on to report that Henry Ford had conveyed the same idea
to him two days earlier.

In December 1940, Mooney set off on a journey to South America
to contact some of the General Motors managers. Secretary of the
Interior Harold Ickes, in an urgent meeting with Roosevelt and
Cordell Hull on December 20, asked, “Wouldn’t it be a good thing
if we refuse Mooney a passport and told him why?’’ Roosevelt said,
“That is a good idea. Cordell, how about it?’’ Hull said, “Passports
to South America have never been refused.’’ Ickes commented,
“South America is a critical zone. We shouldn’t let Mooney in.’’
But Hull did.

The FBI apparently traced Mooney to further meetings with rep¬
resentatives of the German government. In a letter dated February
5, 1941, marked Strictly Confidential, James B. Stewart, U.S. consul
in Zurich, wrote to Fletcher Warren of the State Department that
he had heard from a French journalist connected to Charles de
Gaulle that Eduard Winter, GM distributor in Berlin now in Paris,
acted as a courier for Mooney, carrying secret messages to the Nazi
high officials in Paris. Stewart said that Winter had a special pass¬
port that allowed him to travel between occupied and unoccupied
France. The letter continued, “Mr. Mooney is known to be in sym¬
pathy with the German government.”

However, Stewart wondered if there was anything in the story,

194

TRADING WITH THE ENEMY

since he believed Mooney to be a fine person. Would Warren com¬
ment? Warren forwarded the letter to Messersmith, who was am¬
bassador to Cuba. In his letter to Messersmith, dated March 1,
1941, Warren said: “I may say that I, personally, am rather un¬
happy about Mr. Mooney, and I am not sure that there is not truth
in Mr. Stewart’s information. There are too many rumors.”

Messersmith replied to Warren on March 5, saying that in his
mind there was no doubt that Mooney was transmitting messages
of a confidential character to the Nazi government. He added,
“Mooney is fundamentally fascist in his sympathies. Of course he
is quite unbalanced ... he is obsessed by this strange notion that
a few businessmen, including himself, can take care of the war and
the peace. I am absolutely sure that Mooney is keeping up this con¬
tact with the Germans because he believes, or at least still hopes,
that they will win the war, and he thinks if they do that he will be
our Quisling.”

Messersmith sent a further letter to Warren on March 7, adding,
“The attitude of Jim Mooney has a great deal to do with the attitude
of some of the people of the GM Overseas Corp. who are making
this difficulty about getting rid of Barletta and other anti-American
representatives of GM.” Barletta was GM’s Cuban representatives.

Questioned about these activities by Hoover’s men, Mooney in¬
sisted he was a patriotic American, a lieutenant commander in the
Reserves in the United States Navy, with a son on active duty with
the Navy. Asked by the FBI’s L. L. Tyler in mid-October 1940 if
he would return, the Hitler medal he said he would, “but it might
jeopardize General Motors getting part of the $100,000,000 of
stockholders* money invested in Nazi Germany.” Clearly, along
with other Fraternity members, Mooney was working for a quick
negotiated peace to release those funds; but even in this time of Eu¬
ropean war, they were gathering interest toward the time when the
war would be over and America would stand next to Hitler in the
scheme of things. He added, “Besides, Hitler is in the right and I’m
not going to do anything to make him mad. I know Hitler has all
the cards.” He said he was sure Hitler would win the war; that there
was justice in Hitler’s general position; that Germany needed more
room; and that if we tried to prevent the expansion of the German
people under Hitler, it would be “just too bad for us.”

Soon after making these remarks, Mooney was promoted to assis-

THE CAR CONNECTION

195

tant to Sloan in charge of defense liaison work in Detroit! In a spe¬
cial report to J. Edgar Hoover, FBI agent Tyler stated (July 23,
1941): “Men of Mr. Mooney’s prominence, holding the views he
holds, are potentially dangerous to national security.”

Tyler was convinced, he went on, that Mooney “was threatening
to the National Defense Program” that Mooney purportedly was
aiding. Tyler also felt that Graeme K. Howard was a danger. He
had been given a secret report from the State Department, which
made clear that Sumner Welles, the Under Secretary of State, had
had to threaten Howard with public exposure before Howard would
agree to fire nine hundred Nazi spies working for the General Mo¬
tors Export Corporation in South America.

On May 1, J. Edgar Hoover reported to Adolf Berle that he had
evidence that Eduard Winter was a Nazi agent, who moved freely
around Europe and had been given his position by Mooney in Ant¬
werp just after Hitler occupied the Low Countries. Adding that
Winter “hopes to be on the winning side whichever is victorious
in the present conflict,” Hoover stated that Winter was the
son-in-law of a German Foreign Office official. He had good party
connections in Germany. In a comment on this note, John Riddle-
berger of the State Department said, “I can easily understand how
Mr. Mooney’s and Mr. Winter’s minds would run along the same
channel with respect to the war.”

Further reports on Mooney state that he had aided the Germans
as director and financial contributor to the German-American
Board of Trade for Commerce, which greatly aided certain Nazis.
The German-American Commerce Association Bulletin contained
pictures of Mooney standing in front of a swastika; it named him
as a GACA financial contributor.

On March 21, 1942, representatives of Du Pont were reported
by the U.S. Consulate in Basle to be meeting with representatives
of Hermann Gorings’s industries at Montreux and St. Moritz. The
subject of the discussions was not disclosed, but the meeting caused
grave concern in Switzerland. It was alleged in reports after the war
that substantial Du Pont funds were retained from 1942 on in Occu¬
pied France, gathering interest for Du Pont/General Motors.

On April 15, 1942, a curious item appeared in Gestapo reports
in Berlin. Eduard Winter, it seemed, hacl been arrested on suspicion
of American espionage. He was now running the General Motors

196

TRADING WITH THE ENEMY

Adam-Opel unit in Nazi Germany and had fallen foul of Wilhelm
Ohnesorge, the postminister who had similarly denounced Wes-
trick. As in the ITT matter, Himmler stepped in and Winter was
released. It was clear that, like Ford, General Motors was protected
from seizure in time of war. Winter continued as usual.

On July 3, 1942, the U.S. Embassy in Panama sent a lengthy re¬
port to the Secretary of State, giving particulars of Nazi activities
in the area. A paragraph read: “General Motors given orders for
molds to the Nazi firm, Erca, or via, the firm Alpa, San Martin.
Both firms should be on the blacklist because they employ Nazis
and work together with Nazi firms." The companies were not black¬
listed.

On November 25, the Nazi alien property custodian appointed
Carl Luer, an official of the government and the Dresdnerbank as
manager of the General Motors Adam-Opel establishment at Riis-
selsheim. This establishment manufactured military aircraft for the
German government throughout World War II. It manufactured
50 percent of all Junkers Ju 88 propulsion systems; the Junkers was
the deadliest bomber of the Nazi air force. It was decided by a spe¬
cial court at Darmstadt shortly after November 25 that the directo¬
rial board under Eduard Winter would remain unaltered.

Charles Levinson, formerly deputy director of the European of¬
fice of the CIO, alleged in his book Vodka-Cola,

Alfred Sloan, James D. Mooney, John T. Smith and Graeme
K. Howard remained on the General Motors-Opel board
... in flagrant violation of existing legislation, information,
contacts, transfers and trade continued [throughout the war]
to flow between the firm’s Detroit headquarters and its sub¬
sidiaries both in Allied countries and in territories controlled
by the Axis powers. The financial records of Opel Russelsheim
revealed that between 1942 and 1945 production and sales
strategy were planned in close coordination with General Mo¬
tors factories throughout the world. ... In 1943, while its
American manufacturers were equipping the United States Air
Force, the German group were developing, manufacturing and
assembling motors for the Messerschmitt 262, the first jet
fighter in the world. This innovation gave the Nazis a basic
technological advantage. With speeds up to 540 miles per hour,

THE CAR CONNECTION

197

this aircraft could fly 100 miles per hour faster than its Ameri¬
can rival, the piston-powered Mustang PI50.

As late as April 1943, General Motors in Stockholm was reported
as trading with the enemy. Henry Morgenthau, in an instruction
given in special code, instructed W. B. Wachtler, regional manager
of GM in New York, to order his Stockholm chief to discontinue
trading.

Further documents show that, as with Ford, repairs on German
army trucks and conversion from gasoline to wood-gasoline produc¬
tion were being handled by GM in Switzerland.

In April 1944 various letters between the U.S. Embassy in Stock¬
holm and the State Department indicate that GM in Sweden was
importing products of Nazi origin, including Freon, with permis¬
sion from State. One letter, dated April 11, 1944, from John G. Wi-
nant said, “We are . . . of the opinion that local manufacture of a
suitable refrigerant in Sweden should be encouraged, but if it proves
impossible for Svenska Nordiska to obtain a suitable local product,
we agree that there would be no objection to the supply of [German]
refrigerant [similar to that from] I.G. Farben.” The refrigerant was
imported.

On April 3, 1943, State Department officials reported to Leland
Harrison of the American Legation in Berne that censorship had
intercepted cabled reports from Swiss General Motors to the parent
company in New York showing that Balkan sales were made from
stock held by General Motors dealers in Axis areas. The report con¬
tinued, “It is understood that the parent company recently in¬
structed the Swiss company to cease reporting on sales in enemy
territory.”

A GM overseas operations man in New York cabled Swiss GM
that “We have been placed in an extremely embarrassing position
by your action.” However, there was no indication that the action
ceased. Only that it must be authorized by the American Legation!
“It is our desire,” the cable continued, “that you keep the Legation
completely informed of your operations and engage in no transac¬
tion to which trading with the enemy regulations of the U.S. govern¬
ment apply without clearing with the Legation. ”* A copy of this tele-

♦Author’s italics.

198

TRADING WITH THE ENEMY

gram was forwarded by State officials to Cordell Hull with the un¬
derstandable proviso: “This cable has been sent in confidential code.
It should be carefully paraphrased before being communicated to
anyone.”

In June 1943, when he was in the Navy, James D. Mooney’s activ¬
ities were still under surveillance by the FBI. He became a prime
reason for a contretemps between the Duke and Duchess of Wind¬
sor and the State Department that month. Lord Halifax, the British
ambassador in Washington, had written to Cordell Hull requesting
that the Duchess of Windsor, who was now in Nassau with her hus¬
band, the governor of the Bahamas, should be freed from the censor¬
ship of her correspondence. This request immediately heightened
grave suspicions in Adolf A. Berle. He sent a memorandum to Cor¬
dell Hull urging him to deny the request. Dated June 18, 1943, it
read:

I believe that the Duchess of Windsor should emphatically be
denied exemption from censorship.

Quite aside from the more shadowy reports about the activities
of this family, it is to be recalled that both the Duke and Duch¬
ess of Windsor were in contact with Mr. James Mooney, of
General Motors, who attempted to act as mediator of a negoti¬
ated peace in the early winter of 1940; that they have main¬
tained correspondence with Charles Bedaux, now in prison in
North Africa and under charges of trading with the enemy,
and possibly of treasonable correspondence with the enemy;
that they have been in constant contact with Axel Wen-
ner-Gren, presently on our Blacklist for suspicious activity; etc.
The Duke of Windsor has been finding many excuses to attend
to “private business” in the United States, which he is doing
at present.

There are positive reasons, therefore, why this immunity
should not be granted—as well as the negative reason that we
are not according this privilege to the wife of an American offi¬
cial.

Hull called Halifax and told him the Duchess’s request was de¬
nied.

THE CAR CONNECTION

199

General Motors went unpunished after the war. According to
Charles Levinson, in 1967, after a prolonged series of detailed re¬
quests, the United States awarded the corporation a total of $33 mil¬
lion tax exemption on profits for the “troubles and destruction occa¬
sioned to its airplane and motorized vehicle factories in Germany
and Austria in World War II.”

The Systems Tycoon

In 1938, Nazi diplomat Fritz Wiedemann appointed the American
millionaire industrial systems inventor, Charles Bedaux, as head of
I.G. commercial operations on behalf of The Fraternity in Europe.
Bedaux had supplied industrial systems of time and motion study
to I.G., ITT, Standard Oil, General Motors, Ford, Sterling Prod¬
ucts, and the other Fraternity members. He had introduced brutal
methods of production that brought about frequent strikes in the
1930s. He was working in Paris with Torkild Rieber’s Texas Corpo¬
ration Nazi contact Nikolaus Bensmann.

It was Bedaux who delegated himself to inveigle the Duke and
Duchess of Windsor into the Fraternity’s plans for a negotiated
peace. Since Hitler’s rise, the Windsors had been fascinated by the
Fiihrer and his New Order in Europe.

In February 1941 the right-wing journalist Fulton Oursler inter¬
viewed Windsor at Government House in the Bahamas, publishing
the results in Liberty magazine. The Duke declared his approval
of negotiated peace to Oursler. He said, “It [the peace] cannot be
another Versailles.’* He went on to express views that were hardcore
expressions of Fraternity thinking, with their emphasis on gold as
currency, Himmler’s police, and the German system: “Whatever
happens, whatever the outcome, a New Order is going to come into
the world. ... It will be buttressed with police power. . . . W’hen
peace comes this time, there is going to be a New Order of Social
Justice*—don’t make any mistake about that—and when that time
comes, what is your country going to do with its gold?’’

During his brief period as monarch, Windsor made every effort
to overcome British prejudice against the Nazis. He became an in¬
spiration for The Link, the British organization of highly placed

*Social Justice was the title of an inflammatory fascist magazine then in cir¬
culation in the United States.

201

202

TRADING WITH THE ENEMY

Nazi sympathizers, which included in its membership some of the
most prominent aristocrats in England.

The Fraternity wanted the Duke tied in more completely with
them. Charles Bedaux was selected by Himmler to insure the
Duke’s political and economic commitment.

Sprightly, stocky and squat, with slicked-back black hair, jug
ears, and the bow legs of a jockey, Bedaux first came to the United
States in 1907 from his native France and became a citizen in 1916.
He had served a stretch in the Foreign Legion before he arrived.
He obtained a job digging his way as a sandhog through the con¬
struction of the East River subway tunnel. He scraped together
what money he could and began developing a system of speeding
up labor, cutting out wasted motion, and improving efficiency. In
his scheme an expert would time the workers with a stopwatch.
Each hour was divided into sixty Bedaux units instead of minutes.
Workers who exceeded the average would be paid more and those
who fell below it would be demoted or fired. By circulating booklets
containing his philosophy of labor, he succeeded in becoming very
rich very fast.

Bedaux’s office on the fifty-third floor of the Chrysler Building
in New York was designed like a refectory of a medieval monastery.
He often met with his friends Lammot du Pont, and Walter Teagle,
and Hermann Schmitz there—in the Chrysler’s Cloud Room for
lunch. He had an apartment in Greenwich Village in which he en¬
tertained his mistresses, redecorating the rooms according to the
lady’s background or nationality.

He married a Daughter of the American Revolution, Fern Lom¬
bard, and thereby obtained a place in the New York Social Register.
He bought a chateau in Touraine, France, for three quarters of a
million dollars. It was a former abbey, with catacombs under the
golf course. He snapped up an estate in North Carolina, a hunting
lodge in Scotland next to Walter Teagle’s, and property in North
Africa. An automobile buff, he crossed the Rockies by car in July
1934, and took a caravan of six cars over 9,500 miles of the Algerian
and Tunisian deserts the following year.

He insinuated himself with the Windsors, offering his chateau to
them for their wedding. Bedaux’s wedding present was a statue enti¬
tled “Love,” the work of Anny Hoefken-Hempel, the lover of Hjal-
mar Schacht. Schacht had introduced Bedaux to Fritz Wiedemann,

THE SYSTEMS TYCOON

203

who appointed Bedaux industrial espionage agent for the Nazi gov¬
ernment.

As the German government’s chief overseas contact for The Fra¬
ternity next to Wiedemann, Bedaux was ideally placed to snare the
Windsors. He was helped by the Windsors’ friend Ambassador Wil¬
liam Bullitt, who moved the U.S. Embassy into the Bedaux chateau
just before the fall of France.

Bedaux wanted to involve the Windsors in his international
schemes. First, arrangements must be made for them to meet with
Hitler and be given a tour of Nazi Germany. In the summer of 1937,
according to MI-6 files in the Ministry of Defence, London, Bedaux
met with the Duke of Windsor, Bedaux’s close friend Errol Flynn,
Rudolf Hess, and Martin Bormann in a secret encounter at the
Hotel Meurice in Paris. At the meeting the Duke promised to help
Hess contact the Duke of Hamilton, who had a direct link with
Himmler and Kurt von Schroder to the Schroder Bank and the
Worms Bank through their common membership in Frank Buch-
man’s Moral Rearmament Movement. Hess was determined to en¬
sure an alliance with Great Britain that would continue despite Hit¬
ler’s conquest. Bedaux was the instrument and Errol Flynn the
glamorous accomplice. The plan was postponed; efforts were made
by Hess to meet with Hamilton on several further occasions, which
finally led to Hess’s dramatic landing on the Hamilton estate in
1941.

The Windsors were enchanted with their visit with Hitler and
their tour of Germany, and the Duchess was seen handing a bagful
of money to a Nazi officer on the border of Austria.

In November 1937, Bedaux tried to arrange a state visit for the
Windsors to the United States. He bombarded Washington
high-ranking officials with telegrams. He wanted the Duke of Wind¬
sor to be received at the White House along with the Duchess; State
Department officials planned that the Duke and the President
should enjoy a Gridiron Club dinner while the Duchess appeared
separately at the Women’s National Press Club. Thousands of let¬
ters poured into the White House and the government departments,
criticizing Roosevelt for snubbing the couple.

Bedaux and his wife arrived on the Europa in November to see
what they could do. He had already talked with British Ambassador
Sir Ronald Lindsay about the matter. The biggest blow was that

204

TRADING WITH THE ENEMY

Mrs. Roosevelt was “away on a lecture tour” and would be unable
to receive the Windsors. Finally, it was decided by the government
not to go ahead with the visit; the reasons were not officially dis¬
closed, but Bedaux’s fascist connections may have had a great deal
to do with it. Appeal after appeal proved useless. Unions made clear
they would picket the Duke’s ship. Francis J. Gorman of the CIO
Textile Workers condemned Bedaux outright for his inhuman sys¬
tems. Bedaux and the Windsors were very upset.

By 1940, while Bedaux was busy undermining France in prepara¬
tion for Vichy and the establishment of full-scale collaboration with
Hitler, Windsor had become a member of the British Military Mis¬
sion with the French Army Command. Neville Chamberlain and
Winston Churchill were aware that Windsor’s Nazi connections
were far more serious than a mere confused sympathy would indi¬
cate.

On May 3, 1941, J. Edgar Hoover sent a memorandum to Roose¬
velt’s secretary, Major General Watson, which read as follows:

Information has been received at this Bureau from a source
that is socially prominent and known to be in touch with some
of the people involved, but for whom we cannot vouch, to the
effect that Joseph P. Kennedy, the former Ambassador to En¬
gland, and Ben Smith, the Wall Street operator, some time in
the past had a meeting with Goring in Vichy, France, and that
thereafter Kennedy and Smith had donated a considerable
amount of money to the German cause. They are both de¬
scribed as being very anti-British and pro-German.

This same source of information advised that it was reported
that the Duke of Windsor entered into an agreement which in
substance was to the effect that if Germany was victorious in
the war, Hermann Goring through his control of the army
would overthrow Hitler and would thereafter install the Duke
of Windsor as the King of England. This information concern¬
ing the Windsors is said to have originated with Allen McIn¬
tosh, a personal friend of the Duke of Windsor, who made the
arrangements for the entertainment of the Windsors when they
are in Miami recently. It is further reported that it is the inten¬
tion of the Windsors to visit in Newport, Rhode Island, and
also in Canada during the coming summer.

THE SYSTEMS TYCOON

205

When Windsor asked Chamberlain for a more important job, the
Duke was frozen out. Mortified, he committed himself to the ap¬
peasement group in England which remained part of The Link and
still included Montagu Norman, of the Bank of England and the
BIS, and Sir Harry McGowan of ICI.* In January 1940, Count Ju¬
lius von Zech-Burkersroda, Nazi minister to The Hague, sent a spe¬
cial emissary to London to ask Windsor to tell the British govern¬
ment that it was useless to change Germany politically and that
Windsor should help bring about a negotiated peace. Windsor was
fascinated.

On February 18, according to German foreign office records,
Windsor actually disclosed to Zech’s emissary the details of a secret
meeting of the Allied War Council. Windsor revealed that the
Council had discussed in detail the situation that would arise if Ger¬
many invaded Belgium. The Council members had discussed the
discovery of a German invasion plan found in an airplane that had
made a forced landing in Belgium. The Council had decided that
the best scheme was to set up a resistance effort behind the Bel¬
gian-French border. Some members of the Council were unwilling
to surrender Belgium and the Netherlands after the humiliation of
the defeat of Poland. They did not feel that a resistance plan was
sufficient, and they urged the other members to defend Belgium to
the last. The entire message was of such importance to the German
government that it was shown to Hitler in person. Baron Ernst von
Weizsacker of the Foreign Office in Berlin wrote to Count Julius
on March 2, 1940, that the report supplied by the Duke had been
of interest to the Fiihrer. He added, “If you can without inconve¬
nience obtain further information of this nature, I should be grateful
if you would pass it on to me; please do so preferably in the form
of a report . . . directing it to me personally.”

Had these letters slipped into the hands of British Intelligence,
there is no question that the Duke of Windsor would have been ar¬
rested and subjected to a court-martial by Churchill. As it was, he
proceeded to France at the time of the German take-over, with Brit¬
ish Intelligence agents following him. By now it was much too dan¬
gerous for him to be seen with Charles Bedaux, who was busy set¬
ting up the Vichy take-over and having daily meetings at the Worms

Later, Lord McGowan.

206

TRADING WITH THE ENEMY

Bank. The Windsors proceeded into Spain via Port Bou, that favor¬
ite crossing place of people under suspicion.

After a desperate effort by Walter Schellenberg to have them re¬
turned to Germany prior to their taking over the British throne,
the couple yielded to pressure from Churchill via their old friend
Sir Walter Monckton and sailed to the Bahamas, where Windsor
was made governor.

In their absence Winston Churchill personally made the curious
move on April 7, 1941, of having U.S. Ambassador William Bullitt
pay the Nazi government 55 thousand francs’ annual rental on their
property in Occupied Paris and 10 thousand francs* insurance plus
payment to their servants and 15 thousand francs for the rent of
the strong room at the Bank of France, despite the fact that the bank
was directly under Hitler’s control. Bedaux acted as a go-between
in the arrangements since he was close to Bullitt and Nazi Ambassa¬
dor Otto Abetz.

The Windsors stayed in touch with Bedaux until 1943, a fact that
infuriated Morgenthau, Ickes, and Adolf Berle as well as the liberals
in Congress headed by John M. Coffee and Jerry Voorhis. Bedaux
schemed with Admiral Jean Darlan in North Africa in planning to
destroy the British Empire; he helped to pledge Syria as a Nazi sup¬
ply base for a prospective battle of Suez; and he collaborated with
the Nazis in Spain, working with the Vichy leader Marshal Petain
in securing 300,000 tons of steel for Germany. Ambassador Bullitt
rewarded him by making him a special attache at a time when Bul¬
litt was already publicly criticizing the Nazi government. Bedaux
was put in charge of American property in Occupied France as a
special economic advisor to Abetz and German Administrator H-J
Caesar. Thus, he enabled The Fraternity to function more easily
and was instrumental in approving the establishment of the Chase
and Morgan banks and the Ford Motor Company in Occupied
France even after Pearl Harbor.

In October 1940 he went to Africa at Petain’s request to under¬
take developments including railroads, power plants, water and coal
production, in alliance with the Vichy General Maxime Weygand,
then governor general of Africa. Bedaux presented to the German
government his plans for camouflaging refineries at Abadan against
Allied bombing; in return for his services he arranged for the trans-

THE SYSTEMS TYCOON

207

ference of his confiscated Dutch corporation to Paris just before
Pearl Harbor.

After Pearl Harbor, Bedaux was automatically arrested as an
American citizen, but he was released after a month through the
intercession of Abetz and the Gestapo. Because of pressure from
those Germans who, like Postminister Ohnesorge, objected to deal¬
ings with the enemy, Bedaux was arrested again, on September 27,
1942. The elegant American traitor was surprised to find himself,
along with his attractive wife, in the Paris Zoo, where he languished
for one night in a cage normally used by monkeys.

Bedaux and his wife were released from imprisonment on the
basis that he persuaded General Otto von Stulpnagel, who was in
command of the German forces in Occupied France, of the necessity
for France to build a strong French Africa. He was given full gov¬
ernmental powers to execute his plan for the construction of a pipe¬
line from Colomb-Bechar in southern Algeria to Bourem on the
Niger River in the French Sudan in French West Africa. The pur¬
pose was two-fold: The pipeline would carry 200,000 tons of water
annually to different points in the Sahara for use by Rommel’s army,
and it would convey 2,000,000 tons of peanut oil from French West
Africa to Colomb-Bechar for shipping by rail for reshipment by
boat to Vichy. Fifty-five thousand tons of steel had been assigned
by the German authorities for the construction of the pipeline, and
the financing was undertaken by the Banque de Paris et des
Pays-Bas.

Bedaux was authorized to hire 240 people initially, many of them
from the crews engaged in the construction of the ill-fated
Trans-Saharan Railway. The whole culture of peanuts in French
West Africa was to be reorganized and the center of industry trans¬
ferred from Dakar to Ouagadougou; and the vast and fertile area
in the bend of the Niger River including pans of the Ivory Coast,
French Sudan, and the Niger Colony, were to be exploited on a vast
scale. Rafts constructed in French Guinea would carry hundreds
of thousands of tons of peanuts a year from western Sudan via the
Niger to Bourem, where presses would be erected for the extraction
of the oil.

On July 22, 1942, Bedaux went to see S. Pinkney Tuck, charge
d’affaires for the United States government in Vichy. He had just
had lunch with Pierre Laval. He left with the embassy a photostatic

208

TRADING WITH THE ENEMY

copy of the release order of the German authorities in Paris, desig¬
nating him the leading expert in economic matters in France. He
said he had just returned from a survey of the coal mines in the Sa¬
hara Desert, which he expected to yield 1,200 tons of coal a day;
he said that the present output was 800 tons a day and that he was
responsible for all the cities in North Africa having electric power.
He said he was concerned with building a New Europe that would
end the misery of the world; when Tuck asked him about the Ger¬
man attitude toward the war’s future, he supplied intelligence on
German problems. He said he had assisted as a technical advisor
at a number of gatherings in which French and German technicians
gathered. He talked of the strides the Gestapo was making in
France, Major General Karl Oberg’s treatment of the Jews, and exe¬
cution of hostages. He suggested that the United States should trade
more with Laval, pretending that Laval was unhappy with the Ger¬
man government. He said to Tuck, “If the American press and pub¬
lic opinion could be persuaded to modify their present critical atti¬
tude towards Laval, it might be possible for our Government to
make good use of him.”

Tuck concluded,

I believe that this astonishing person can be classified as men¬
tally unmoral. He apparently lacks the tradition and back¬
ground which should make him realize that there is anything
wrong, as an American citizen, in his open association with

our declared enemies-By such opportunistic tactics—which

are not unmindful of Laval’s—he may be attempting to find
for himself a safe place in the New Order. Should this New
Order fail to materialize, he evidently imagines that he will be
able to justify his association with the Germans by his refusal
to accept their pay.

This curious document indicates a very peculiar attitude on the
part of Pinkney Tuck. Knowing full well that Bedaux was American
and that he was collaborating with the enemy, Tuck nevertheless
made no attempt whatsoever as charge d’affaires to have him arrest¬
ed.

On October 29, 1942, Charles Bedaux arrived at the American
Consulate General in Algiers and told Minister Robert Murphy that

THE SYSTEMS TYCOON

209

he was bent on his mission to aid the German government. This
was almost a year after the United States was at war with Germany.
It might well be asked whether a traitor would volunteer such infor¬
mation to an American representative if he were not assured of im¬
munity from arrest.

In a memorandum to Cordell Hull dated October 30, 1942, Mur¬
phy gave a remarkable account of the visit. Bedaux said that he had
been granted freedom to perform his mission in French Africa and
“it was in that connection that he called upon me in Algiers.'* Unhe¬
sitatingly, Bedaux handed Murphy his German authorizations and
a special set of instructions signed by Pierre Laval.

On April 12, 1943, Hoover wrote to Harry Hopkins telling him
of Bedaux’s arrest. Hoover revealed that Eisenhower had specifi¬
cally asked the two FBI men to go to North Africa to conduct the
investigation into Bedaux’s activities. Although the Federal Bureau
of Investigation had no authorization to handle North Africa, since
its provenance was restricted to the American continent, Biddle
conferred with Hoover, and as a result two prominent FBI agents
were sent to Algiers by plane to interrogate Bedaux. The plane car¬
rying them crashed. Two other agents were flown over in their
place.

Acting on instructions from Hoover and Biddle, the agents, again
acting entirely outside their legal and authorized provenance,
showed themselves anxious to protect Bedaux from Army Intelli¬
gence. It was painfully obvious that strings had been pulled with
Biddle once again. The agents went to see the officers of the French
police, who produced the critical evidence of the Bedaux-Schroder
Nazi conspiracy. Instead of accepting this material as evidence of
treason, the FBI men accused the French detectives of planting the
evidence, and they tried to have the charges against Bedaux offi¬
cially withdrawn. Yet that same evidence can today be seen in U.S.
Military Intelligence files.

The U.S. Army under Eisenhower was keen on having action
taken, but an Executive Order of the Army Intelligence dated Janu¬
ary 4, 1943, shows that pressure from high places was such on the
Army that all plans for a tribunal were suspended. The excuse given
was that the case against Bedaux “had to be watertight,” while in
fact it was already conclusive.

Bedaux was held for a full year in prison while nothing whatso-

210

TRADING WITH THE ENEMY

ever was done about him. He continually protested that he had
aided and abetted American businesses in Occupied Europe, a mis¬
take since this was the last fact that anybody in high command
wanted to have made public. At long last, on December 16, 1943,
Bedaux was turned over to Lieutenant Colonel Herndon for mili¬
tary escort to the United States, arriving on December 23 at Miami,
Florida. The same day, Lieutenant Colonel Crabtree of the Army
Air Force suddenly released Bedaux from Herndon’s custody, gave
Bedaux twenty-seven hundred confiscated dollars and took all of
the Bedaux papers to Washington. Army officials ordered the Cus¬
toms officials (who were not normally under their provenance) to
pass papers without examination by censors or Customs, then took
Bedaux to the Colonial Hotel in Miami. From there, instead of
going to a state prison, he was placed in a comfortable detention
home in charge of Immigration, with special consideration from the
authorities.

On December 28, one of Biddle’s agents suddenly turned up at
the Immigration station and asked the authorities to lighten what
minimal restrictions Bedaux was experiencing. On December 29,
Biddle ordered the War Department to withdraw completely from
the case.

The cover-up continued. Bedaux gave FBI men a list of very
prominent figures of commerce who could be expected to testify in
his behalf in the event that he should ever come to trial. Biddle im¬
mediately suppressed the list. However, it fell into the hands of the
liberal weekly, The Nation , which revealed the names on the list
as those of “industrialists who had recently been involved in
anti-Trust cases’’! That meant, of course, the American figures of
The Fraternity.

On February 14, 1944, Bedaux was advised by an Immigration
agent that a board of special inquiry of the Immigration and Natu¬
ralization Service had “concluded that he was a citizen of the United
States’’ and had never surrendered that citizenship. Further, the
INS would order his admission into the United States as soon as
certain minor formalities had been complied with. The INS man
also told Bedaux that “a grand jury would be convened to inquire
into his relations with high officials of the German government and
the Vichy French government, and that the grand jury would con-

THE SYSTEMS TYCOON

211

sider whether he should be indicted for treason and for communi¬
cating with the enemy.”

Major Lemuel Schofield had only recently stepped down as head
of Immigration and members of his immediate staff were still in of¬
fice, so it was unlikely that anything would have come of the grand
jury hearing. However, Bedaux had become distinctly inconvenient
to The Fraternity. There was a strict rule in the Immigration station
that sleeping pills must not be given to prisoners, but Bedaux was
allowed the special privilege of using them. On February 14, 1944,
Bedaux retired to bed and swallowed all of the pills he had hoarded
since his arrival on December 23. Max Lemer and I. F. Stone dis¬
closed in PM and in The Nation that they were convinced that Be¬
daux was encouraged to take the easy way out. It is impossible to
differ with that opinion.

.•j fin* ?♦*. ' -rM

.T.itti t 1 k:' -c . 1 :

The Diplomat, the Major, the Princess, and the Knight

Throughout World War II, Max Ilgner of I.G. Farben ran the or¬
ganization known as the A.O. Financed by I.G. Farben, the organi¬
zation of Germans Abroad was not officially but in fact actually
under Walter Schellenberg’s direct control.* The leading agents for
the A.O. in the hemisphere were Hitler’s former commanding offi¬
cer Fritz Wiedemann and Hitler’s beloved treacherous Princess Ste-
fanie Hohenlohe. With I.G. money and direct approval from
Himmler, Wiedemann and Stefanie were the most peripatetic mem¬
bers of the American-Nazi international fellowship. They schemed
along with Schellenberg for the downfall of Hitler and the advent
of Himmler and the Schmitz Council of Twelve. They, like Himm¬
ler, dreamed of the restoration of the German monarchy. They vis¬
ited the Kaiser in Doom, Holland, until 1941, the year of his death.

Wiedemann and Stefanie entered the United States telling the
FBI privately that they had fallen out of favor with Hitler. This was
true, since Hitler in fact was gravely suspicious of both of them be¬
cause of their connections to both the official plot to dislodge him
and to the ambiguous Admiral Wilhelm Canaris, head of the Abwe-
hr, German Military Intelligence, who himself was suspected of
being a double agent. As consul general in San Francisco, Wiede¬
mann was head of the Orient Gruppe, the SD network that encom¬
passed the whole Pacific basin including the North and South
American coastal states, Thailand, Malaya, Hong Kong, mainland
China, Formosa, and Japan while at the same time collaborating
with the British and Americans. The Princess Hohenlohe, a widow,
was his mistress, with unlimited connections in society.

The princess was half Jewish. She had been given the title of Hon¬
orary Aryan by Dr. Goebbels along with General Erhard Milch of
the air force in return for her services to the Third Reich. She and

*Its nominal chief was Ernst-Wilhelm Bohle.

213

214

TRADING WITH THE ENEMY

Wiedemann had become romantically involved at the time of Hit¬
ler’s rise to power.

Wiedemann was handsome, with black wavy hair, chiseled fea¬
tures, a powerful jaw, and a boxer’s physique. Fluent in many lan¬
guages, shrewdly intelligent, he was the toast of society on both
sides of the Atlantic. The princess had been quite pretty as a young
woman but had not aged well. The addition of years had filled out
her figure and rendered her features far less attractive. Nevertheless,
she had immense charm and vivacity; she was witty, sparkling,
high-strung, and wonderful company. She was also one of the most
dangerous women in Europe.

In the early 1930s, Wiedemann and Stefanie were entirely de¬
voted to Hitler and I.G. Farben’s A.O. They were friendly with
Lord Rothermere, British millionaire-owner of the London Daily
Mail, who gave the princess a total of $5 million in cash to assist
in Hitler’s rise to power. She was less successful in France, which
deported her in 1934 for scheming against an alliance between
France and Poland that might have helped protect Europe from
Nazi encroachment. She formed a close friendship with Otto Abetz,
the smooth Nazi representative in Paris who later became ambassa¬
dor and was so helpful in the fall of France. In 1938 the princess
arranged a meeting between Wiedemann and Lord Halifax, the
British Foreign Minister, in London, the purpose of which was to
determine Halifax’s and Chamberlain’s attitude to Hitler. The mis¬
sion was successful. As the princess had promised, Halifax told
Wiedemann that the British government was in sympathy with Hit¬
ler and that he had a vision that “Hitler would ride in triumph
through the streets of London in the royal carriage along with King
George VI.”

Wiedemann and the princess were credited by Hitler with helping
to pave the way to his annexation of European territories. The Fiih-
rer rewarded her with the gift of Leopoldskron Castle near Salz¬
burg, former property of the great Jewish theatrical producer Max
Reinhardt. Beginning in 1933, Wiedemann made several visits to
the United States, chiefly to direct the rabid Nazi organization
known as the Friends of New Germany. He aided Ribbentrop in
negotiating an anti-Comintern pact with Japan, and in the spring
of 1938 traveled to the Balkans to bring them closer into the realm
of the Axis.

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

215

Stefanie also spent much time in Switzerland, where she linked
up with German Intelligence nets, many of them connected to her
former husband, Prince Hohenlohe, who had been head of
Austro-Hungarian intelligence in that country in World War I.

During the British abdication crisis of Edward VIII, Lord Roth-
ermere sent the princess from London to Berlin with a Gobelin tap¬
estry as a Christmas present for Hitler. After Edward abdicated,
Hitler cabled Ribbentrop in London, “Now that the king has been
dethroned, there is certainly no other person in England who is
ready to play with us. Report to me on what you’ve been able to
do. I shan’t blame you if it amounts to nothing.** The princess ar¬
rived at Berchtesgaden for a tete-a-tete just after this telegram. Hit¬
ler flirted with her and touched her hair; she had always wondered
if he was a homosexual and was delighted to discover that he was
attracted to her. She reminded him cheerfully that there were many
in Britain who would indeed “play** with the Fiihrer even if Edward
would no longer be able to do so in his new position as Duke of
Windsor. She was soon to learn that the Duke of Windsor was still
able to “play.**

In the late 1930s, Princess Stefanie traveled continuously to Lon¬
don, Paris, Berlin, Salzburg, Madrid, and Rome. She was usually
on Rothermere’s payroll, and accepted a swastika-shaped diamond
clip from Hitler and a photograph on which Hitler wrote “To my
esteemed Princess.** She and Wiedemann visited the United States
in 1937, where they linked up to Fraternity friends such as Sos-
thenes Behn, Walter Teagle, and Edsel Ford. Their social position
gave them great influence over prominent figures who could affect
others in the Nazi cause. Hermann Schmitz rewarded the princess
with a parcel of I.G. shares. At the Ritz Hotel in London a week
after war broke out in September 1939, several lady aristocrats de¬
nounced her as a spy and insisted that she leave the restaurant at
once. She proceeded calmly with her meal.

Later that year she was busy fighting an unsuccessful lawsuit in
the London courts against Lord Rothermere for nonpayment of the
amounts due to her in her travels on behalf of the Nazi cause. The
case tied her up in London. Wiedemann went ahead to New York
with the understanding that she would follow soon afterward. Now
that Europe was plunged into conflict, their purpose was to help
keep America out of the war and to unite German-Americans in

216

TRADING WITH THE ENEMY

business to the Fatherland. Wiedemann set up the Ger-
man-American Business League, which had as its rules purchase
from Germans only, a boycott of Jewish firms, and the insistence
that all employees be Aryans. Financed by Max Ugner through
General Aniline and Film, Wiedemann developed the Business
League while pretending to denounce the Associated Bunds organi¬
zation. Among the members were the owners of 1,036 small firms,
including numerous import-export companies, fuel services, dry
goods stores, meat markets, and adult and children’s dress shops.
The League stirred up anti-Jewish feeling, financed secret Nazi mili¬
tary training camps, paid for radio time for Nazi plays, and publi¬
cized German goods. It ran lotteries without licenses and sold blue
candles to aid its brethren in Poland and Czechoslovakia before
those countries were annexed.

On September 10, just after war broke out in Europe, Wiedemann
told the German-American Business League in San Francisco:
“You are citizens of the United States, which has allied itself with
an enemy of the German nation. The time will come when you may
have to decide which side to take. I would caution that I cannot
advise you what to do but you should be governed by your con¬
science. One duty lies with the Mother country, the other with the
adopted country. Blood is thicker than ink ... Germany is the land
of the fathers and regardless of consequences, you should not disre¬
gard the traditional heritage which is yours.”

The Princess Stefanie’s arrival in California in 1940 was not as
trivial or absurd in purpose as it seemed, accompanied as it was by
a great deal of publicity including seemingly endless column men¬
tions. Given her glamour and notorious reputation., she was asked
to many social events in San Francisco and Los Angeles. The idea
of a Nazi princess electrified society, even those members of it who
delighted in stating their fondness for England. She was quizzed,
gushed over, and interviewed incessantly. Meanwhile, she talked
with the wives of business leaders, to try to influence their husbands
toward the Nazi cause. She warned of the dangers of communism,
and the possibility that Hitler might attack America if America
were not friendly. She mentioned the wealth and prosperity of Ger¬
many.

She was a perfect agent for Nazi philosophy. She helped bring
about many deals between businessmen and the I.G. Farben cartels.

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

217

She continued her romantic liaison with Wiedemann. FBI agent
Frank Angell and a special team tracked the two down to Sequoia
National Forest where Wiedemann and the princess spent the night
together in a log cabin while the G-men lurked among the trees.

J. Edgar Hoover became so obsessed with the princess and her
doings that he had squads of men following the wrong woman: the
Princess Mabel Hohenlohe, an innocent American who had married
into the family. Mabel and her friend, the socialite Gurnee Munn,
were dogged futilely for months when they had in fact done nothing
more serious than acquire a Palm Beach parking ticket.

At the beginning of 1940 the Princess Stefanie met Sir William
Wiseman, baronet and Cambridge boxing Blue. Plump, with a bris¬
tling mustache and dignified air, he had been head of British Intelli¬
gence in World War I. He had become a partner in the Jewish bank¬
ing company Kuhn, Loeb. Treasury documents assert that the
company was aligned with the dominant group of companies in
Latin America that had entered into agreement with Nazi trusts
to divide up the Latin American communications business.

According to A Man Called Intrepid , the well-known biography
of Sir William Stevenson, head of British Security Coordination in
the United States, Wiseman was a member of Stevenson’s staff in
World War II and was delegated to spy on Wiedemann and Hohen¬
lohe with the authorization of J. Edgar Hoover and the British gov¬
ernment.

The FBI files contradict this assertion. Indeed, they show that
Wiseman was under suspicion and investigation. Army Intelligence
chiefs’ memoranda show that Wiseman was unauthorized by the
British or American governments to act in any negotiations whatso¬
ever. Indeed, his activities were neither condoned nor supported by
any government.

In a note dated December 14, 1940, Brigadier General Sherman
Miles, Chief of G-2, wrote to J. Edgar Hoover: ”1 suppose it is possi¬
ble [Wiseman] is another of the same group of Englishmen that has
negotiated with the Nazis in the past through men like Axel Wen-
ner-Gren, Torkild Rieber and James D. Mooney.”

According to A Man Called Intrepid, a most inaccurate work,
Wiseman was authorized by the FBI to hold a private meeting on
November 26, 1940, at the Mark Hopkins Hotel in San Francisco
with Wiedemann and Hohenlohe to discuss a negotiated peace with

218

TRADING WITH THE ENEMY

Hitler. The FBI records and Hoover’s notes to Roosevelt on the
matter show that the FBI’s San Francisco representative N.J.L.
Fieper simply got wind of the meeting and, highly suspicious of
Wiseman, decided independently to monitor it.

The meeting represented the essence of Fraternity thinking. Wise¬
man, as the FBI reported later, made it clear that he was acting
as the mediator, not for the government of Great Britain, as he later
claimed, but for the appeasement groiip in London headed by Lord
Halifax, who was soon to become ambassador to Washington. Win¬
ston Churchill had clearly defined in speech after speech, memoran¬
dum after memorandum, his position on the war: total surrender
of Germany without compromise. Wiseman made clear at the meet¬
ing that Halifax and he thought differently.

The princess said she would, as a Hungarian subject, bring Hitler
the peace offer from Halifax, obtaining a fake visa in Switzerland
in order to enter Germany. She would intercede directly with the
Fiihrer, using his affection for her, and if that failed, she would assist
in the ill-conceived Royalist/Schellenberg/I. G. Farben coup d’etat
in which Himmler would take over and permanently restore the
monarchy. A representative of Himmler’s Gestapo would then meet
with Halifax in London to confirm the arrangements for an alliance
with Great Britain. Wiseman irresponsibly said that now that
France was out of the way, the British could offer more favorable
peace terms to Germany: “The French are always the difficult ones
to satisfy, and we’ve had to consider France in the past. France will
not have to be considered now except from the standpoint that she
will be reestablished like Poland.”

Wiseman supplied Wiedemann at this meeting with intelligence
about the way in which the Royal Navy had intercepted Hitler’s
plans for the invasion of England. Simultaneously, Wiedemann gave
Wiseman intelligence on the workings of the German High Com¬
mand. Wiseman said, “If I were advising Hitler as a friend, I would
say the amount of damage you could do to America is nothing com¬
pared to the damage that can be done if you make the Americans
mad. They get mad slowly but it takes them a long time to get
unmad. They get hysterical and look for a spy under every sofa,
and from that point of view it just takes America more into the war.
From my point of view, I do not want them to do it, because I do

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

219

not want to see more killing. ... I would say that I do not want
a lot of sabotage in America because it just makes the feeling so
much more bitter and things so much more difficult.” These words
are almost identical to those found in Wiedemann’s and Charge
d’Affaires Hans Thomsen’s memoranda to Berlin.

Hoover kept a tight scrutiny on the three communicants from
that moment on . On December 18, 1940, the FBI tapped the prin¬
cess’s telephone. She was calling Wiseman in New York City from
California to beg him to assist her in extending her visa and avoiding
deportation. Wiseman, clearly embarrassed, told her, “Please don’t
talk any more about it over the phone. . . . Don’t say any more.”
The princess told him, “You know I will be eternally indebted to
you. You know you will never have to regret this.” Wiseman went
on, “I will send you a telegram telling you when to call me and will
do all I can for you.”

She kept on calling Wiseman, begging him to do everything in
his power to stop the newspapers from printing anything concerning
her deportation. He contacted Ingram Fraser of the British Pur¬
chasing Commission, trying to pull strings in Whitehall.

On January 3, 1941, Wiseman had a meeting with Herbert Ba¬
yard Swope, a wealthy politician, who conveyed a message from
Lord Beaverbrook that Wiseman was to meet Lord Halifax soon
thereafter “to negotiate peace.” Wiseman had a series of discussions
with high-level diplomats including figures of the Australian Em¬
bassy. A useful contact in the State Department was none other
than Cordell Hull’s cousin, Lytle Hull. Indeed, when World War
II ended, Wiedemann asserted that Lytle Hull supplied him with
inside intelligence on the State Department.

Another conspirator was the United States director of the Immi¬
gration and Naturalization Service, Major Lemuel Schofield, an
enormously fat man with a head like a football and large, ugly fea¬
tures. When there was a public outcry for the princess to leave the
United States in 1940, Schofield announced that no nation would
take her, thereby preventing her deportation. He became more and
more deeply involved in a romance with her when Wiedemann jilted
her in favor of a general’s divorced wife, Alice Crockett.

Wiedemann sent Mrs. Crockett to Berlin to meet with Hitler and
Himmler and determine if the German government was satisfied

220

TRADING WITH THE ENEMY

with his efforts. This ordinary San Francisco housewife found her¬
self in a whirlwind of high-level meetings. She was astonished to
discover that Himmler gave her a special reception. But when she
returned, she turned on Wiedemann and reported him and his secret
activities to the FBI. She also sued him for several thousand dollars
for unpaid fees in connection with her journey to Germany. She
charged that Wiedemann was in concert with I.G. Farben, General
Aniline and Film, Henry Ford, and Charles Lindbergh to bring
about “subversion and sabotage in the interests of the Nazi govern¬
ment.” She said that many American government officials, as well
as plant superintendents, workers, and foremen in industries, partic¬
ularly the steel and munitions industries, were in Wiedemann’s pay.
She claimed he “employed ruffians to stir racial hate . . . and paid
such ruffians from funds of the German government.”

Despite the fact that Mrs. Crockett was telling the truth, and that
her husband had been a prominent figure in the U.S. Army, her case
was thrown out of court and she was not even granted public recog¬
nition for her efforts.

Meanwhile, Sir William Wiseman was still working hard to pre¬
vent the Princess Stefanie from being shunted off to Nazi Germany,
where she might reveal too much. His guilty collusion with her is
as clear as Major Schofield’s in the numerous documents that have
recently been declassified.

Wiseman, in a conversation one midnight with a British person
whom the FBI could not identify, said that he had “done everything
possible to keep the threatened deportation quiet” but he was “dras¬
tically concerned with Steffi’s habit of blowing her cover.”

He said in a conversation with Ingram Fraser of the British Pur¬
chasing Commission that he was concerned “to keep that hysterical
creature from going off the deep end . . . from losing her head and
spilling all the beans on the table.” Fraser said, “This may spoil a
very beautiful friendship.” Wiseman said, “If the friendship spoils,
we’ll just have to go out and pick up another one.” He added, “This
gives an opportunity for a scandal on a really big scale. That’s what
I’m afraid of.”

FBI men followed Wiseman everywhere by car, train, and plane.
There was a flurry of meetings between Wiseman and Ingram Fra¬
ser. Wiseman and the Hohenlohes strongly welcomed the appoint-

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

221

ment of Lord Halifax as ambassador for Great Britain in the United
States.

Lord Beaverbrook in London cabled that he wanted Wiseman
to contact Lord Halifax “as soon as Halifax arrived.” There were
a series of mysterious meetings between Wiseman, former President
Herbert Hoover, Herbert Bayard Swope, and others, apparently on
the matter of the negotiated peace.

On May 20, 1941, Schofield came through. He dropped the de¬
portation proceedings and gave an interview to newspapermen at
San Francisco Immigration headquarters explaining why: “While
in custody the Princess Stefanie has cooperated with the Depart¬
ment of Justice and has furnished information of interest. The De¬
partment believes her release from custody will not be adverse to
the interests and welfare of this country. Arrangements have been
made for her continued cooperation, and her whereabouts and ac¬
tivities will be known at all times.”

The major personally conducted the princess to her luxurious
apartment in Palo Alto. Dressed in a chic back crepe dress with
frothy white collar, white gloves, and a black and white hat, the
Nazi princess was in a good mood on May 25, 1941, as she drove
around San Francisco with the Director of Immigration at the
wheel. Asked by reporters wherever he went if he would explain
the “interesting information” Hohenlohe had given him, the major
said with a smile, “Obviously not.”

Although Walter Winchell, President Roosevelt, and seemingly
everybody in Washington knew that the head of Immigration and
the Nazi’s favorite agent were involved in an affair, her release
passed without significant public protest of any kind. The strongest
statement appeared in the New York Sun. It was: “If 130 million
people cannot exclude one person with no legal right to remain here,
something seems wrong.”

Hoover tried very hard to obtain from the Attorney General the
“important information” to which Schofield referred, but there was
no reply to his or his assistant’s many phone calls. In fact, FBI mem¬
oranda show the FBI couldn’t even interview the princess. When
Percy Foxworth of the New York FBI headquarters sent a memo¬
randum on June 1 to Hoover saying, “It appears desirable to have
Princess Hohenlohe interviewed in order that complete information
which she can furnish may be available for consideration in connec-

222

TRADING WITH THE ENEMY

tion with our national defense investigations . . . regarding German
espionage activities,” Hoover scribbled a note at the foot of the
memo, “Not until we get from McGuire [Matthew F. McGuire, as¬
sistant to Attorney General Jackson] a copy of what she told Scho¬
field, then we should ask McGuire for clearance* to talk to her.”

Next day at a congressional committee hearing in Washington,
author Jan Valtin testified that Wiedemann’s consulate was a clear¬
inghouse for the Gestapo.

By early June, McGuire had still not yet yielded up Hohenlohe’s
statement to Schofield. The applications went on and on. Wiede¬
mann was still out of town by early June, filming bridges and roads
and dams from Colorado to Florida.

On June 15, 1941, McGuire sent a memo to Hoover saying that
the princess’s statement was “in the personal possession of Lemmy
Schofield and was being typed.” The same day, Drew Pearson in
his Washington Times-Herald column said that Hohenlohe had
paid for her freedom with “some amazing revelations about subver¬
sive operations in this country and Britain.” Hoover wrote on the
article photocopy sent to his office, “Have we gotten this statement
yet? Maybe if the Dept, won’t give it to us we might get Pearson
to supply us with a copy!”

Pearson’s article went on to say that the princess had told Scho¬
field that Wiedemann was in bad odor with Hitler because of his
friendship with Himmler’s friend Hess, who had just flown to En¬
gland on his famous peace mission; that she had given Immigration
officials a list of Nazi sympathizers in Britain who had been trying
to effect a negotiated peace with Hitler; that she had specifically
named Rothermere; that she had named other German Nazi agents.

By June 20, Hoover had become exasperated by the Department
of Justice’s seemingly endless delays in supplying Steffi’s revelations.
McGuire was stalling and refused to disclose why Drew Pearson
had information the FBI did not. “This is the worst pushing around
we have gotten yet,” Hoover wrote at the foot of a memorandum
from Edward A. Tamm of his staff on the latest delaying tactic.

Meanwhile, Hoover was tireless in ordering reports on Steffi’s
Nazi connections.

Agent N.J.L. Pieper in San Francisco tapped several telephones

Author’s italics.

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

223

to learn that Wiedemann had had a falling-out with Steffi. An infor¬
mant called Pieper to say that he was a German friend of Wiede¬
mann’s who felt he owed something to the American government.
He leaked the contents of a conversation he had had with Wiede¬
mann, who said, ‘‘There is nothing the Princess could have said that
would harm me. She wouldn’t. Indeed, she gave nothing to Immi¬
gration. It was a blind so that Schofield could let her out. And
there’s another element. Cordell Hull’s cousin, Lytle Hull, was to¬
gether with Schofield in this matter. He wanted her released.”

This disclosure could not be acted on by Hoover, because of his
limited powers.

In mid-June 1941, under enormous pressure from Roosevelt, the
government dropped a bombshell. All Nazi consulates in America
were ordered closed.

Wiedemann was under orders to leave the country by July 10.
He had only been in the consulate for a few weeks. Several people
walked by the building and were heard by reporters to say ‘‘Good
riddance.” Two American sailors climbed to the roof of the consul¬
ate and pulled down the swastika flag.

The night after orders came from Washington, Wiedemann’s
neighbors reported smoke pouring from the chimney of the consul¬
ate with flakes of ash. Papers were being stuffed into the consulate
fires while others were loaded into the official Mercedes-Benzes to
be put aboard German ships bound for their homeland. There were
rumors that Wiedemann had offered to tell the Hearst organization
everything he knew about Nazis in America in return for being al¬
lowed to remain in the United States. But this turned out to be false.

By June 26, Hoover still did not have Steffi’s report. When Wiede¬
mann and three friends went to the Stairway to the Stars nightclub
in San Francisco, patrons at surrounding tables asked to be moved
away. On July 3, Edward Tamm of the FBI reminded Hoover in
a memo that after two months McGuire had still failed to come up
with the promised report.

On July 8, Wiedemann traveled to Los Angeles to give all of his
espionage reports in person to local Consul George Gyssling. Gys-
sling was leaving for Germany on the S.S. West Point: Wiedemann
was to travel to China to continue with his work linking up the Ger¬
man and Japanese intelligence nets. He would also meet there Lud-

224

TRADING WITH THE ENEMY

wig Ehrhardt, Steffi’s second cousin by marriage, who was to be¬
come espionage chief for the Abwehr in the Orient two years later.

On July 9 it was announced that Wiedemann and Dr. Hans Bor-
chers, new consul general in New York, would be leaving on the
Japanese liner Yawata Man l The British government had failed to
give assurance of the safety of agents on the Japanese shipping lines,
and this made Wiedemann extremely nervous.

Suddenly the British announced that Wiedemann would be ex¬
empt from seizure under his diplomatic immunity. For some reason
Wiedemann didn’t believe this. Possibly he thought it was a trick,
because at the last minute he chartered three planes for himself and
his staff and few via Omaha and Chicago to New York.

Hoover had them followed. Meanwhile, Steffi was in Washington
at the Wardman Park Hotel. It became the talk of the town that
she was continuing her affair with Schofield. On July 31, Steffi’s re¬
ports still not yielded up, Schofield sent to Attorney General Biddle
(who had replaced Jackson) that in order to help America, she
would supply a series of articles criticizing Hitler: domestic broad¬
casts; shortwave broadcasts to the Axis; replies to pro-German
speeches by Lindbergh, Senator Wheeler, and so on; lectures. And
all these would include the following: She would attack Hitler vio¬
lently, describing his “treachery, deceit and cunning,’’ adding that
he was a “sly and cunning trickster’’ and “doesn’t shrink from mur¬
der to achieve his purposes.’’ In August 1941 the FBI apparently
gave up hope of ever receiving Hohenlohe’s report. With incredible
boldness, the major moved from the Raleigh Hotel to the Wardman
Park on the same floor as the princess.

Princess Stefanie was in bad form, screaming constantly at the
staff. Schofield had to pay enormous tips to pacify the maids. On
August 9 it was announced in the Washington Times-Herald that
the princess would publish a book in six weeks containing the “se¬
cret information’’ she had allegedly handed to Schofield. The FBI’s
Harry M. Kimball sent a memo to agent Foxworth next day saying
rather plaintively, “It might be as well to yet again request this in¬
formation from Mr. McGuire, pointing out the indication men¬
tioned in the article that the press intends to fully publicize this mat¬
ter within the next six weeks and that it would be most
advantageous for the Bureau to have available this information
prior to the time it becomes public.’’

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT 225

At long last, on August 18, 1941, the Princess Hohenlohe was
asked to leave Washington. The scandal of her affair with Schofield
was such that acting Attorney General Biddle asked him to have
her returned to California immediately. When Edward Tamm of
the FBI got wind of this, he called Biddle. Where was the princess’s
statement? Biddle stated he knew nothing whatsoever about it.

At the end of August, Wiedemann was in Berlin, reporting to
Himmler on his many findings. In September he was on his way
by L.A.T.I. airlines to Argentina, where Nazi activities were exten¬
sive. He arrived in Rio in September, to confer with the Gestapo
leader Gottfried Sandstede, who had just escaped from Buenos
Aires. The Brazilian newspaper O Globo had a photograph of
Wiedemann on the front page with the headline “Number One Nazi
of the Americas.” The article stated bluntly that Wiedemann was
responsible only to Hitler and had left $5 million in America to fi¬
nance Nazi espionage rings.

Throughout August the Princess Hohenlohe moved to the homes
of various friends of Schofield’s in his native state of Pennsylvania.
Meanwhile, in Rio, local police searched Wiedemann’s belongings
and found a list of Nazi agents in California. They also determined
that he was headed for the Orient, a fact he himself confirmed the
following day.

Wiedemann sailed for Kobe on the Manila Maru via Chile on
September 8. Violent demonstrations outside the embassy caused
him to leave on the first available vessel. Two small bombs exploded
as he drove in an armed car to the Buenos Aires wharves.*

Meanwhile, the princess was staying in a house (described as a
“lovenest” by Walter Winchell) in Alexandria, Virginia. FBI men
saw Schofield arriving at the house in the evenings and leaving in
the mornings. She was still using the name “Nancy White.”

In the days just before Pearl Harbor the princess was in Philadel¬
phia with Schofield. Her address book was examined by the FBI
during her absence from the hotel and was found to include the
name of Francis Biddle’s wife. Hoover made a special note of the
fact.

The moment the Japanese bombed Hawaii on December 7, Hoo-

* Wiedemann’s movements are erroneously reported in A Man Called Intrep¬
id .

226

TRADING WITH THE ENEMY

ver wasted no time. As the Princess Hohenlohe left a Philadelphia
theater with her mother at 10:20 p.m. on the night of December 8,
FBI agents seized her. They bundled her into a car, leaving her
eighty-nine-year-old mother screaming imprecations at them on the
sidewalk. Hohenlohe was fingerprinted and photographed. She tried
in vain to call Schofield by telephone. She was taken to the Glouces¬
ter Immigration station in New Jersey and put into solitary confine¬
ment, later changed to dormitory accommodations where she joined
four Japanese girls and a woman from New Jersey who had tram¬
pled on the American flag and who spent much of her time doing
double somersaults while the princess read the reminiscences of Ma¬
dame de Pompadour.

It was now confirmed by Hoover that the supposed confession
the princess had made out in order to be released from deportation
had never existed. McGuire’s and Jackson’s statements that the im¬
portant document was being typed amounted to little more than a
lie. Precisely why the Attorney General chose to become involved
in this deception remains undisclosed.

The plot thickened in mid-January. In a report of January 15,
1942, to Hoover by Special Agent D. M. Ladd, it was made clear
that the princess had “a very influential friend in the State Depart¬
ment whose mistress she had been; the Princess had stated that this
friend had the authority to permit Axis aliens to enter the country
and to keep anti-Axis aliens out of the country.” The name to this
day is blacked out in the report. Since Schofield’s name appears in
all the other reports, the reference presumably is to Breckinridge
Long. To this day, the FBI refuses to declassify it.

During February 1942, Hohenlohe was writing letters to her
mother at the Philadelphia YWCA, full of instructions on what
Schofield was to do. He was to tell reporters not to molest her, check
everything before it was published, and find some way out of prison
for her on the pretense she was Hungarian, not Austrian. Hoover
kept careful note of all these correspondences.

The princess gave the performance of a lifetime at the camp, fak¬
ing a stroke and invoking her friendship with Sir William Wiseman.
Biddle proved to be most helpful, insisting that the princess should
be transferred from Gloucester to a place of “the alien’s choice”
where she could get proper treatment.

The local inspector and the head of the Immigration station con-

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT 227

ferred with the Philadelphia U.S. Assistant Attorney, who fortu¬
nately for national security evaded the order that, he pointed out,
could result in the princess choosing any hospital she liked, “even
though the hospital or members of its staff were suspected of Ger¬
man activities.”

The “stroke” changed to a fit of temperament and the princess
stayed where she was.

Schofield dared to make a couple of visits. He saw to it the prin¬
cess was given considerate treatment. Her mother spent many hours
with Schofield in offices in downtown Philadelphia, followed con¬
stantly by FBI agents. But it proved impossible to bug Schofield’s
office.

Roosevelt wrote to Hoover on November 28, 1941, “I spoke to
the Attorney General about the Hohenlohe case and he assures me
that he has broken up the romance. Also, he thinks it best not to
change the present domicile as the person in question is much easier
to watch at that place. Please do a confidential recheck for me.”

On June 17, 1942, Roosevelt wrote again to Hoover: “Once more
I have to bother you about that Hohenlohe woman. I really think
that this whole affair verges not merely on the ridiculous but on the
disgraceful. Is the woman really at Ellis Island?”

On July 11, it was clear nothing had been done. The President
wrote to Biddle, “Unless the Immigration Service cleans up once
and for all the favoritism shown to that Hohenlohe woman, I will
have to have an investigation made and the facts will not be very
palatable, going all the way back to her first arrest and continuing
through her intimacy with Schofield. . . . Honestly, this is getting
to be the kind of scandal that calls for very drastic and immediate
action.”

The princess had her problems. She was being threatened with
a legal action for the recovery of funds paid out and legal services
supplied by her London lawyers, Theodore Goddard and Company.
She tried to finance the repayment by pressing several publishers
to take her memoirs; the ever-reliable Schofield managed to get her
a special pass to travel to New York to discuss the matter with her
agents in March. The President was getting more and more restless.

An interesting episode took place on July 16, 1942. An FBI spe¬
cial agent went to the visiting room of the prison on the pretext of
interviewing one of the inmates. He noticed the lax conditions: a

228

TRADING WITH THE ENEMY

Nazi spy who had recently been arrested was speaking on the pay
telephone in German without being monitored. The princess was
perched on a desk; she seemed to be in good spirits and taking a
letter cheerfully from a prison staff member. Apparently her skills
included a mastery of shorthand. Or she may have been making a
translation.

The prison staff man said boldly in conversation to the agent,
“The princess has to have personal attention, and I like to keep her
company. Sometimes she helps me censor the mail!”

What this did to national security can only be guessed at. Not
surprisingly, Hoover ordered an “all-out effort to discreetly obtain
information concerning the activities of the princess.”

It was reported by several plants at Gloucester that employees
received raises via Schofield because of their kindness to the prin¬
cess. Every effort was made to survey the princess’s activities from
adjoining windows; Hoover had ordered the use of “a rooming
house” for the purpose. Unfortunately, there was no such building
and “the main street in front of the station is patrolled by Coast
Guards who are suspicious of any individuals who may pass by. It
would not be feasible to park a car in the proper position to observe
activities without being detected by the Coast Guard.”

Hoover was drastically concerned and sent a message to his New
York office reading (August 3, 1942), “In view of the interest which
has been shown in this matter by the President of the United States
and the Attorney General, you are directed to obtain all develop¬
ments concerning it immediately and submit the same to the bureau
for the attention of the espionage section.”

The princess’s luck was remarkable: it proved difficult for the law
firm in London to pursue their case against her because her attor¬
ney, David Brooks, was missing in action in Singapore. This caused
a delay in the case.

She began turning to the church when Schofield proved under¬
standably cool. She asked the priest to contact Cardinal Doherty,
but he declined, perhaps in part because she wasn’t a Catholic as
she pretended. *

In order to allay or smother the President’s suspicions. Attorney
General Biddle decided to transfer the princess to Seagoville, Texas,
a convenient distance from Washington. Schofield made sure that
a contact man was planted in the camp as his stooge. At last one

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

229

of the FBI men took a chance and advised the Coast Guard of his
purpose in watching Gloucester station. The Coast Guard was
under special instruction to watch every move the princess’s mother
made in case she tried to spring Stefanie loose.

Stefanie became violent at the thought of being transferred to
Texas and, in the words of a report, “acted like a tigress.” She said
that if her captors wanted to take her out of Gloucester, “they
would have to carry her.” As a result, an American Legion ambu¬
lance arrived at the center with two men carrying a restraining sheet
and a straitjacket. When she saw these, she announced she felt better
and proceeded to the railway station in an Immigration car. As she
sailed out of the camp’s gate, someone was heard to say, “Is Scho¬
field in Texas?”

The answer was in the affirmative. In fact, Schofield had preceded
her there by two days. Suddenly the reason for her going to Texas
became clear: She could try to escape across the Mexican border.

The princess left the train station in style. She demanded the
Coast Guard carry her suitcases, and when they declined, she casti¬
gated them, accusing them of being physically weak. Stung to the
quick, they obliged. When she arrived on the train, she expressed
astonishment that she had not been given a drawing room but was
compelled to sit in the day coach with an officer on either side of
her. But she soon flirted with the two men so outrageously that they
brought her a glass of white wine and some peanuts.

The baroness, her mother, was already installed at the Hotel Ad¬
olphus in Dallas. The princess arrived at Seagoville only to dash
off a telegram to an Immigration official that read: impossible for

MOTHER. PLEASE DISCARD ALL CONSIDERATION OR ETIQUETTE,

pursue and insist that B [her code for Schofield] does what
YOU wish, unbearable hurry, stefanie.

The telegram was no problem to understand; it meant that the
official, firmly in Hohenlohe’s pocket, was to abandon his own cau¬
tion and make sure that Schofield got her back to Gloucester with
no further ado. Apparently, the heat had already proved more than
a counterbalance to the chances of escape to Mexico.

The princess began threatening everybody at Seagoville, saying
that she would be out of Texas in a very short time. Whether that
meant she intended to go to Mexico or New Jersey was far from
clear.

230

TRADING WITH THE ENEMY

To confuse matters further, the same day she arrived in Seago-
ville, Wiedemann was reported to have arrived by submarine near
Seattle.

It is scarcely surprising that Schofield was in fact in Seagoville
when Princess Hohenlohe came off the train on a stretcher and was
carried to the hospital for ten days despite the fact there was nothing
wrong with her. She demanded use of the telephone, extended hours
for visits from her mother, and sleeping powders. However, the
major’s influence was limited at Seagoville. The inspector in charge
of Immigration, Joseph O’Rourke, ignored Schofield’s pleas and
made sure she had no privileges at all. He also added a couple of
guards to the cyclone fence. The princess announced that no fence
would hold her and she would escape and go to Mexico at the slight¬
est opportunity. Stefanie’s mother announced that she wished to be
interned with her daughter as she had nowhere else to stay. Biddle
conveniently placed an order for her arrest.

Desperation set in by the end of November. The princess had
given Schofield some jewelry to sell for additional favors and he had
failed to return it. On an impulse she called the local FBI man in
Dallas and said she would personally give Hoover a full account
of her activities with Lord Rothermere, her association with Fritz
Wiedemann, and particularly her contact with Major Schofield. She
asked to be assured that this information would not be furnished
to INS. She was warned that Biddle and Schofield were very close
personal friends and Biddle would ignore her. She then said that
her mother had told Schofield that Stefanie was being framed and
that Stefanie was about ready to go to Hoover about the case when
Schofield became alarmed and paid the baroness’s way back to
Texas. As a last ditch stand Stefanie offered to throw in personal
information about Hitler and Goebbels to insure her release. Ed¬
ward Tamm of the Washington FBI, in his memo to Hoover, said
that the “Princess is a very clever and, consequently, a very danger¬
ous woman, and that she is maneuvering now to play the Bureau
against the Immigration Service so she will get something out of
it.’’

In January 1943 the princess wrote a heavily reworked version
of her life and sent it off to the FBI. She told the Dallas agent John
Little as she handed over this scrambled document, “What I have
to tell will be as sensational as [any] saboteur’s trial. What I have

THE DIPLOMAT, THE MAJOR, AND THE KNIGHT

231

to tell is a 50-50 proposition. You will never regret it as long as
you live. If you help my story to receive the proper attention, you
will be reimbursed many, many times. I also have means in Wash¬
ington where a person giving the right word will see that your career
is furthered!*’

She claimed she was railroaded into internment to protect Scho¬
field’s name. She said, “Anyone who comes in contact with me—it
is his lucky day. This interview will make your career. My story
will make headlines.’’ She demanded to be sent to Hoover and Roo¬
sevelt “about matters which I can only relate to the President.”

She became hysterical several times and then admitted, “I am a
spoiled brat.” She insisted that Agent Little promise to release her.
She said that she knew of “secret misunderstandings” between Hoo¬
ver and Schofield. She said Schofield was dreadfully afraid of Walter
Winchell. She said Schofield had her jewels and she would report
him to Hoover. She said, “I always tell the whole truth and nothing
but the truth. And only lie when I have to.”

She asked for a special board to sit on her case comprised of Hoo¬
ver, Schofield, Biddle, “and anybody else who should be present.”

“That is beyond imagination,” Little replied.

She continued. “Ask Mr. Hoover to come here in person. I won’t
always be a nobody. I have friends. You’ll do what you can?” She
sent a letter to Hoover, grossly flattering to John Little. She then
said, mysteriously, “I have something to tell you, Mr. Hoover, of
a personal nature. As a result, I will be cleared!”

With blackmail in the air, Little left.

Her last words to him were, “You will make headlines!”

In a further statement she pretended that she had not been inti¬
mate with a man since 1920. (“Where some women take pleasure
in giving themselves, I take pleasure in denying myself.”)

The material was the same mixture as before: a blend of truth
and fantasy and veiled threats. It seems to have impressed somebody
in Washington, because efforts were made to arrange a new hearing
of the Princess Hohenlohe’s case. She sent several letters to Hoover
that indicated clearly she had given up on Hitler because of the news
of his failures in the war. Meanwhile, her mother posed as an insane
person and asked for commitment to a mental institution. She was
judged mad at a state court at Dallas. She was put in a pauper’s
ward.

232

TRADING WITH THE ENEMY

Another agent went to see the Princess Hohenlohe in November
1943 and found her extremely distraught and in an emotional condi¬
tion. He described her as "a consummate actress," "her emotion
. . . artificial and designed to win my sympathy."

On March 1, 1944, the Princess Hohenlohe finally got her hear¬
ing. Those present on' the board were two members of the Depart¬
ment of Justice and one member of the FBI. The board concluded
she was innocent of everything and that she should be paroled at
once. She sailed triumphantly out of Seagoville—but not at once.
Hoover held up the matter for some weeks. Roosevelt personally
overruled the board and saw to it that the princess was not released
for the duration.

In late January 1945, Stefanie tried to kill herself with an over¬
dose of pills. How she obtained them is a mystery. The princess sent
a harsh letter to Biddle and a long rambling note to Eleanor Roose¬
velt.

The princess was finally released a few days after V-E Day. She
appeared to have suffered little from her ordeal, and Major Scho¬
field welcomed her back with open arms. They moved to his farm
near Philadelphia and lived there as man and wife. The princess re¬
conquered New York society. Seen dancing at the Stork Club, she
provoked columnist Robert Ruark into writing that soon Ribben-
trop would be observed in similar circumstances.

Wiedemann was equally fortunate. During the war years he had
successfully run Nazi intelligence in Occupied China from the con¬
sulate in Tientsin, guarding his safety by claiming diplomatic immu¬
nity when the American troops moved in and by pointing out that
he had protected Jews there.

Arrested in China in 1945, Wiedemann turned state’s evidence
at Nuremberg, providing familiar information in a melange that se¬
cured him immunity from the Nuremberg Trials. Wiedemann
breezed through denazification. He was credited with being part of
the plot whereby Admiral Canaris, head of the Abwehr, had hoped
to remove Hitler—not, more accurately, with the Himmler plot.
The FBI never sent the huge file on him and the princess to Nurem¬
berg. They were not asked to so do. Once again, The Fraternity had
closed its ranks.

The Fraternity Runs for Cover

The Nuremberg Trials successfully buried the truth of The Frater¬
nity connections. Schacht, who was more privy to the financial con¬
nections than most German leaders, gave an extraordinary perfor¬
mance, mocking, hectoring, and pouring contempt upon his chief
prosecutor—Biddle’s “predecessor, Robert H. Jackson. Charged
with engineering the war when he had only wanted to serve the neu¬
tralist policies of Fraternity associates, he was understandably ac¬
quitted. Had he chosen to do so, he could have stripped bare the
details of the conspiracy, but only once in his entire
cross-examination, when he admitted to complicity in the shipment
to Berlin of the Austrian gold,* did he indicate any knowledge of
such matters. Never in those days on the witness stand was he asked
about the Bank for International Settlements or Thomas H. McKit-
trick. Not even in his memoirs was there an inkling of what he knew.

Conveniently for The Fraternity, Goring and Himmler commit¬
ted suicide, carrying with them the secrets that Charles Bedaux,
William Rhodes Davis, William Weiss of Sterling, and William S.
Farish had carried to their graves. James V. Forrestal also ended
his life by suicide. In 1949 he hanged himself from the window of
the Bethesda Naval Hospital in Washington, D.C., where he was
suffering from advanced paranoid schizophrenia. Newspapers re¬
ported him screaming that the Jews and the communists were
crawling on the floor of his room seeking to destroy him.

The rest of the conspirators lived out full life-spans.

When Germany fell, Hermann Schmitz fled from Frankfurt to
a hiding place in a small house near Heidelberg. Shuffled around
between the lines in a railroad carriage, this powerful man cowered
in terror as bombs exploded about him. But he was softly handled
when the U.S. Army moved in. He was imprisoned, but well treated,
thanks to the influence of his great and powerful friends. Despite

•But not the Czech, Belgian, or Dutch.

233

234

TRADING WITH THE ENEMY

the fact that he and his colleagues had been responsible for the
deaths of four million Jews at Auschwitz, they were not tried for
mass murder as war criminals. Instead, they were tried for prepar¬
ing and planning aggressive war, and other related counts. Since
they had intended to form a world fascist state without war if possi¬
ble, and since their whole purpose was simply to render Germany
equal in a United States of Fascism, they were acquitted on the first
charge. The lesser charges resulted in insignificant sentences.

Thinner now and equipped with a distinguished Vandyke beard,
Schmitz cleverly decided not to give evidence at the trial. He
claimed illness but in fact was seldom absent. His only statement
came at the end of the hearings when he had the audacity to quote
St. Augustine and, for good measure, Abraham Lincoln, to the judg¬
es. He spent only eight more months in prison.

Max Ugner was equally cunning. He told the prosecutors he
would become a priest after he left prison. He did.

Espionage was not an issue in the case; no summoning of transat¬
lantic figures was considered. Dietrich Schmitz, now on a chicken
farm in Connecticut, and Rudolph Ilgner went unpunished. In vari¬
ous court hearings of the 1940s, Schmitz and Ilgner had been in¬
dicted but the cases against them were never prosecuted.

On September 8, 1944, Roosevelt had sent a letter to Cordell Hull
that was front page in many newspapers. It included the bold state¬
ment, “The history of the use of the I.G. Farben trust by the Nazis
reads like a detective story. Defeat of the Nazi army will have to
be followed by the eradication of those weapons of economic war¬
fare/’

The powers of the Allied Military Government who favored The
Fraternity disagreed and insisted upon I.G. Farben being retained
after light punishment for its leaders. Morgenthau protested to Roo¬
sevelt, who summoned him to a discussion at the Quebec Confer¬
ence in September 1944.

Morgenthau laid out his idealistic and impractical Morgenthau
Plan—actually the creation of Harry Dexter White. Based upon his
profound knowledge of collusion, White wanted a total elimination
not only of I.G. Farben but of all German armaments and chemical
and metallurgical industries. He wanted Germany to become a
strictly agrarian economy; Roosevelt seemed to agree. In December
1944, Roosevelt, taking his cue from Morgenthau, made a statement

THE FRATERNITY RUNS FOR COVER

235

via John G. Winant in which he called for an abolition of the Nazi
industrial war machine. But already there were some compromises
in the plan. Morgenthau came under a storm of abuse from the right
wing, and the ailing President was now yielding to some minor pres¬
sures and starting to back away. In February 1945, at the Yalta
Conference, Roosevelt, by now grievously ill, strove to follow Mor-
genthau’s reasoning by making the much criticized arrangements
to divide Germany down the middle into eastern and western zones.

When Truman became President, Eisenhower, as commander in
chief of European forces, continued to follow Morgenthau’s attitude
with severe edicts, calling for disruption of any Nazi source of a
possible World War III. But Truman disagreed. He was convinced
that to render Germany agrarian was to leave an open path for Bol¬
shevist conquest. General George S. Patton agreed with him and
began to put Nazis back in office in Germany after the war.

Those who, with ideals held high, arrived in Germany from the
United States to try to disrupt the cartels were severely handicapped
from the start. One of these was a promising young lawyer, Russell
A. Nixon, a liberal member of the U.S. Military Government Cartel
Unit. He was handicapped from the start. He came directly under
Brigadier General William H. Draper, who was, along with James
V. Forrestal, a vice-president of Dillon, Read, bankers who had fi¬
nanced Germany after World War I. Nixon quickly realized that
Draper, director of the economics division, and Robert Murphy,
who had moved from North Africa to become ambassador to the
new Germany, were going to block his every move.

When he arrived in Germany in July 1945, Nixon found his posi¬
tion was virtually untenable. He had been asked to explore a tunnel
that had already been bricked up.

He asked Colonel E. S. Pillsbury, Special Control Officer in
charge of I.G. Farben, what had been done these several months
after V-E day to carry out Eisenhower’s directives on dismantling
Farben. Pillsbury failed to give any information and seriously ques¬
tioned whether Nixon had any jurisdiction to investigate the cartel.
Nixon turned in desperation to several members of Draper’s staff,
only to discover that Draper had failed to give them written direc¬
tives to close I.G. plants.

One man, Joseph Dodge, told Nixon he had instructed his team
to dismantle an I.G. poison gas plant but that Draper had canceled

236

TRADING WITH THE ENEMY

the order. Again, Dodge tried to wreck the I.G. underground plant
at Mannheim and again Draper intervened. Soon afterward. Dodge
told Nixon, Draper arranged for both plants to obtain added busi¬
ness.

Frustrated, Nixon went over Draper's head. He reported to Gen¬
eral Lucius D. Clay on December 17, 1945, that Eisenhower’s or¬
ders had been deliberately violated. He charged that, contrary to
Draper’s statements in the press that every I.G. plant had been
bombed or dismantled, none had been. He said that General Henry
H. Arnold of the Army Air Force had protected I.G. and he added
that despite the pleas of the Jewish councils the installations and
communications systems of Auschwitz had not been destroyed.

Clay listened to Nixon’s charges but did nothing about them.
Nixon found that scientific and mechanical equipment in I.G. plants
had been saved from removal on specific orders from Washington.
Searching through files on January 15, 1946, Nixon found a letter
written by Max Ilgner that gave the game away. Dated May 15,
1944, and addressed to the I.G. Central Finance Department, the
letter instructed the staff to keep “in constant touch” in defeated
Germany since the American authorities “would surely permit re¬
sumption of I.G. operations.” Thus, the head of the N.W.7. I.G.
espionage unit looked forward confidently to the future. He of all
people knew the Americans he was dealing with.

Nixon was handicapped not only by the American military gov¬
ernment, but by the British. The Labour government in England
was in severe financial difficulties and wanted to make sure it had
good industrial connections in Germany. Like the American gov¬
ernment, it was busy reconstituting I.G. When Russell A. Nixon
pleaded with Sir Percy Mills at meetings of the Joint Chiefs of Staff
to use his influence with Clay and Draper, Mills simply held matters
up further. As a result, scarcely any Nazi industrial leader was in
custody by 1946.

Nixon did manage to have a few people brought in. These in¬
cluded Paul Denker, I.G.’s chief accountant in the poison gas divi¬
sion; Carl von Heider, sales director of inorganic chemicals; Hans
Kugler, director of dyestuff sales; Gunther Frank-Fahle and Kurt
Kreuger of Ilgner’s espionage group; and Gustave Kupper, head
of the dyestuffs’ legal division. None of these spent any time in cus¬
tody. Nixon also wanted to bring in directors of the banks that had

THE FRATERNITY RUNS FOR COVER

237

been deeply involved with I.G., including the Deutsche Bank, the
Deutsche Landersbank, the Reichsbank, and the Dresdnerbank. He
wanted to ask them about the whereabouts of German looted good
and cash including the Austrian and Czech gold transferred
through the BIS. Again he was blocked: Draper told Count¬
er-Intelligence not to make the arrests. Nixon pleaded directly to
Washington, and after a considerable delay Draper was overruled.
But no sooner had the bank officials been taken to Army headquar¬
ters than a Major General Adcock, representing Draper, brought
orders for their release. Nixon was told he had been insubordinate
in going over Draper’s head and should be court-martialed as a radi¬
cal.

Nixon later reported to the Senator Owen Brewster War Commit¬
tee in Washington that by the spring of 1946 only 85,000 of 200,000
industrial and Gestapo leaders had been arrested. He was particu¬
larly annoyed by the exemption accorded to the major Nazi indus¬
trialist Richard Freudenberg, who had worked with Goring and
Carl Krauch on the Four-Year Plan and had been on the board of
the Schroder Bank. When Nixon took the bold step of ordering
Freudenberg arrested under mandatory arrest provision JCF 1067,
the denazification board in Frankfurt voted four to one to exempt
him from the provision, and Ambassador to Germany Robert Mur¬
phy ordered his release. Murphy made a statement that proved to
be significant: “It is not in conformity with American standards to
cut away the basis of private property.” Apparently it was in confor¬
mity with American standards to restore high-ranking Nazis to
their previous positions. With unconscious humor a member of the
Industry Division of the Occupying Forces confirmed Murphy’s po¬
sition by saying, “This man Freudenberg is an extremely capable
industrialist: a kind of Henry Ford.” No one could quarrel with
that.

Draper sent an official to take charge of Nixon’s operation in the
winter of 1946. Carl Peters was in charge of Foreign Economic Ad¬
ministration under Leo Crowley. He was also a director of the Ad¬
vanced Solvents Corporation, a subsidiary of General Aniline and
Film. He had been indicted for dealing with the enemy but had
pleaded nolle prosequi and had been awarded the position of colonel
in the Pentagon. No sooner was he in charge of Nixon than he began

238

TRADING WITH THE ENEMY

securing the release of German industrialists and set up the old Nor¬
wegian plant Noramco as an I.G. subsidiary once more.

Nixon had had enough. He returned to the United States and con¬
demned the entire protection of Nazis to Senator Kilgor’s investiga¬
tive committee. He charged that elements in the United States, Brit¬
ish, and French foreign offices had consciously maneuvered to
prevent the Allies from being involved in the search for Nazi assets
in neutral countries, because that search would lay bare the fascist
regimes in Spain, Portugal, Switzerland, Sweden, and Argentina
“and would reveal all the elements of collaboration of certain indus¬
trialists in the Allied countries with these regimes.”

The young, very sharp lawyer James Stewart Martin of the De¬
partment of Justice’s investigative team came to Europe from Wash¬
ington. He arrived at U.S. Military Command at Busy Park, Lon¬
don, only to find that Graeme K. Howard of General Motors was
colonel over him. Martin protested to G-2 about the General Mo-
tors-Nazi connection, and nothing was done. But he managed to
find a copy of Howard’s book America and a New World Order :
Fearful of a public outcry, the Army shipped Howard home.

Martin investigated the whereabouts of Gerhardt Westrick. In
the last year of the war Westrick had played an increasingly difficult
and dangerous role in Germany. After Generals Fellgiebel and
Thiele were hanged for treason, Westrick managed to hang on al¬
most to the end of the conflict. He fled when Berlin was bombed
and his home was destroyed. He hid out in a castle in southwest
Germany. Behn, clearly afraid of the consequences if his association
with Westrick became known, refused to answer his old friend’s
pleading letters. Instead, he arranged for Westrick to be brought
by his Army associates to Paris to give a full report to ITT’s Colonel
Alexander Sanders at the Hotel Claridge on the status of the ITT
companies in Germany.

Westrick was given a light prison sentence and released—deeply
embittered that Behn had let him be punished at all.

Martin found out that Leo T. Crowley and Ernest K. Halbach,
those custodians of General Aniline and Film, when asked to supply
the truth of GAPs actual ownership through I.G. Chemie, had sim¬
ply referred the matter to Allen Dulles. The head of the OSS had
failed to supply the required information.

At the I.G. headquarters in Frankfurt, Martin discovered files

THE FRATERNITY RUNS FOR COVER

239

that confirmed earlier beliefs that Schmitz had laid out plans for
a conquered world in which America would join in triumph. He
began to understand why Schmitz and the others of I.G. had turned
against Hitler. It was clear that Hitler wanted to attack the United
States with Goring’s bombers when sufficiently long-distance air¬
craft were developed. But Schmitz was loyal to his American col¬
leagues, preferring to maintain the alliances in perpetuity. These al¬
liances could be sustained if Himmler and/or the German generals
ran the Third Reich. They would be content with Schmitz’s dream
of a negotiated peace.

Further evidence came to light showing the continuing connec¬
tion between Schmitz and the Untied States during the war. In 1943
a magazine article by R. T. Haslam of Standard Oil appeared in
The Petroleum Times. It stated that the relationship with I.G. Far-
ben had proved to be advantageous to the United States govern¬
ment. A special report of I.G. Farben emphatically denied this,
pointing out the innumerable benefits that Germany had obtained
from her American friends, including the use of tetraethyl, without
which the war effort would have been impossible, and the supply
of which had been approved by the U.S. War Department. The re¬
port said, “At the outbreak of war we were completely prepared
from a technical point of view. We obtained standards not only from
our own experiences but also from those of General Motors and
other big manufacturers of automobiles.” The report also revealed
that Standard had sold $20 million worth of mineral oil products
including airplane benzene to I.G. The report concluded: “The fact
that we actually succeeded ... in buying these quantities demanded
by the German government from Standard Oil Co. and the Royal
Dutch Shell group and importing them into Germany was only be¬
cause of the support of Standard Oil Company.” Even more damn¬
ing, Martin found that I.G. had placed a 50 million mark credit
to Karl Lindemann’s Standard subsidiary in Germany in the
Deutsch Landersbank, wholly owned by I.G. with Hermann
Schmitz as chairman, in 1944 .

Thus, it was clear that Standard’s business in Nazi Germany was
open as usual and that its German subsidiary was being paid hand¬
somely for prewar agreements.

Martin and his team were hampered at every turn. He wrote in
his book All Honorable Men:

240

TRADING WITH THE ENEMY

We had not been stopped in Germany by German business.
We had been stopped in Germany by American business. The
forces that stopped us had operated from the United States but
had not operated in the open. We were not stopped by a law
of Congress, by an Executive Order of the President, or even
by a change of policy approved by the President ... in short,
whatever it was that had stopped us was not “the government.”
But it clearly had command of channels through which the
government normally operates. The relative powerlessness of
governments in the growing economic power is of course not
new . .. national governments stood on the sidelines while big¬
ger operators arranged the world’s affairs.

These operators were among the obstacles faced by James Stewart
Martin and his team as they began work in the fall of 1945. A year
after they began rummaging through documents, many of the Nazis
in Schmitz’s and Hitler’s immediate circle were untouched by de¬
feat. Schmitz’s fellow director of the Deutsche Bank, Hermann Abs,
was now financial advisor in the British zone. Heinrich Dinkelbach,
also a partner of Schmitz, was in charge of the administration of
all iron and steel industries in the British zone. Yet another director
of the Steel Union, Werner Carp,, the closest friend of Baron von
Schroder’s, was released from detention and became Dinkelbach’s
partner.

So much for Eisenhower’s order to denazify industry. Schmitz
in his prison could afford to smile. “The Nazi chieftains,” Raymond
Daniell wrote in The New York Times on September 20, 1945, “[are]
in positions where they can continue to control to a large degree
the machinery whereby Germany made war.” Daniell continued,

The effect of the breakdown of the denazification program
. . . preserves the power of men whose nationalistic and milita¬
ristic ideas were the very antithesis of democracy ... in indus¬
try, in the fields of transportation and communication, the
flouting of General Eisenhower’s order is particularly flagrant
... in avoiding compliance with [that] order, Army and Mili¬
tary government officials have shown considerable versatility.
Where they have not ignored the order completely, they have

THE FRATERNITY RUNS FOR COVER

241

got around it by reclassifying important jobs under other
names and leaving the Nazi incumbent alone.

Daniell continued:

Nor has there been any known development on the plan for
the disposition of the property of active Nazis, as must have
been contemplated when their accounts were blocked. At pres¬
ent a proposal is being circulated to provide for the payment
of their old salaries to executives who have been arrested and
who are giving evidence to the Occupation authorities. In other
words, it is proposed that those who helped the Nazis be
treated as employees whose services are worth to us approxi¬
mately what the Nazis paid them.

Martin made a serious discovery in October 1945. He reported
that General Patton literally had sabotaged the Potsdam Agreement
calling for a destruction of I.G. and that in fact it was simply being
split into components and allowed to continue with several of
Schmitz’s minor executives continuing in higher positions. Simulta¬
neously, the Kilgore Committee reported in Washington on No¬
vember 15,1945, that the Swiss banks led by the BIS and its member
bank, the Swiss National Bank (which shared directors and staff
members), had violated agreements made at the end of the war not
to permit financial transactions that would help the Nazis dispose
of their loot. Senator Harley Kilgore stated, “Despite ... the assur¬
ances of the Swiss government that German accounts would be
blocked, the Germans maneuvered themselves back into a position
where they could utilize their assets in Switzerland, could acquire
desperately needed foreign exchange by the sale of looted gold and
could conceal economic reserves for another war. These moves were
made possible by the willingness of the Swiss government and bank¬
ing officials, in violation of their agreement with the Allied Powers,
to make a secret deal with the Nazis.” Martin’s team, working with
a special Treasury group of T-men, unraveled much of this informa¬
tion for Kilgore. They found a letter from Emil Puhl to Dr. Walther
Funk dated March 30, 1945, which said: “Above all I have insisted
[to the National Bank] on our receiving Swiss francs in return for
Reichsmarks which the Reichsbank might release for any reason.

242

TRADING WITH THE ENEMY

That is important as it will enable us to use these francs to transfer
funds into a third country.”

It was agreed by the mission to Switzerland headed by U.S. eco¬
nomics advisor Lauchlin Currie in 1945 that gold might be used
for embassy expenses. Puhl made the Swiss buy the German gold.
A further letter, dated April 6, 1945, from Puhl to Funk read: “All
in all, I believe that we can be satisfied that we have succeeded in
obtaining... arrangements for German-Swiss payments. Whatever
form events will take, such connections will always exist between
our countries, and the fact that there exists a contract agreement
may be of considerable importance in the future. Anyway, the con¬
trary, the breaking off of the innumerable connections, would have
been a rubble pile which would have presented immense difficul¬
ties.”

The day after the Kilgore committee made these disclosures, the
Treasury team along with Martin’s was drastically restricted from
further activities. Raymond Daniell wrote in The New York Times
on November 16 that the experts who came to hunt down the
Reich’s hidden assets were suddenly relegated to obscure roles. “As
a result,” Daniell wrote, “140 Treasury employees are wondering
tonight whether they are going to be recalled or ordered to stay on
here compiling reports and making recommendations that other de¬
partments can use or ignore as they choose. Many of them feel that
their usefulness here has been ended.”

All through those difficult weeks Martin, his team, and the T-men
clashed with Brigadier General Draper and Charles Fahey of Dra¬
per’s legal division, both of whom flagrantly ignored Eisenhower’s
policy and the mandatory terms of the Potsdam Agreement. Russell
Nixon sympathized with their largely hopeless efforts to smash Nazi
economic power in Germany and overseas. He said, “Treasury ex¬
perts are jn the doghouse at the office of Military government.”
Most devastating of all, he stated that Draper had flatly refused to
denazify any financial institution in Germany.

In Washington, Colonel Bernard Bernstein of the Treasury squad
was delivering a powerful series of blows to I.G. before the Kilgore
committee. He denounced Standard’s synthetic rubber agreements,
its $20 million contract for aviation gasoline, its $1 million supply
of tetraethyl. He named Ernest K. Halbach and Hugh Williamson
of GAF as organizers of direct deliveries to I.G.’s South American

THE FRATERNITY RUNS FOR COVER

243

subsidiaries after Pearl Harbor. He charged that Du Pont owned
6 percent of I.G.’s common stock throughout World War II and
that Swiss banks had uniformly refused to yield up details of I.G.
Chemie. Kilgore, commenting on these statements, said, “I am pro¬
foundly disturbed by a number of recent events pointing to an atti¬
tude on the part of some of our key officials which countenances
and even bolsters Nazism in the economic and political life of Ger¬
many.” He said that Draper had ignored directives of six months
earlier to destroy I.G.’s plants. He added that the State Department
blatantly supported Draper’s policy. Kilgore made clear that State
Department policy did not have President Truman’s concurrence.

A U.S. Military government spokesman, who was not named, de¬
nied Kilgore’s charges in The New York Times on Christmas Day
1945. He said it was untrue that the I.G. organization had not been
broken up: that in fact “the entire I.G. question has been placed
on a four-power level.” He was pointing to the fact that the United
States, Britain, France, and Russia all had parts of Farben because
of its diffuse character; he neglected to point out that only Russia
of the four powers had tried to shatter I.G.’s structure.

In July 1946, James Stewart Martin was still struggling to expose
the full truth of Nazi-American business arrangements. He was not
helped by the fact that Brigadier General Draper hired the adven¬
turous Alexander Kreuter, Charles Bedaux’s partner in the Worms
Bank, as his economic aide.

Gordon Kem of ITT also turned up on the scene. Kern, ostensi¬
bly there to be in an advisory capacity, spent most of his time trans¬
ferring the Focke-Wulf factories from the Russian to the American
zone. He also arranged for ITT’s Nazi factory to be used by the
Army Signal Corps, which prevented its dissolution, and had
Westrick brought to Switzerland to disentangle ITT’s Nazi patents
held in Swiss banks.

In October 1946, Senator Kilgore arrived in Germany with the
Senate War Investigation Committee to try to determine why at¬
tempts to decartelize the Nazis were being obstructed at every turn.
George Meader, counsel for the committee, prepared a thousand
pages of testimony from scores of U.S. Army officers. A few weeks
later, when the investigations were continuing, Averell Harriman
(of Brown Brothers, Harriman), Jesse Jones’s successor as Secretary
of Commerce, sent Philip D. Reed, head of General Electric, which

244

TRADING WITH THE ENEMY

had suppressed tungsten carbide in favor of Krupp and financed
Hitler, on an urgent mission to Berlin to confer with Draper. Simul¬
taneously, General Lucius Clay was questioned for two hours se¬
cretly by Kilgore in Washington. The results of the questionnaire
were never disclosed.

In December, Clay was back in Germany, smarting at criticisms
of his activities. He arranged a meeting between Draper and Philip
D. Reed at the office of his finance chief, Jack Bennett. At the meet¬
ing Richard Spencer of Clay’s legal division attacked President Tru¬
man’s policy on denazification and breaking up I.G. Reed reported
to Harriman that the investigation of I.G. and the Americans,
which was still struggling feebly along under Martin’s guidance, was
a symptom of Martin’s “extremism” and should be brought to an
immediate end.

Meader’s detailed report, damning in detail and forceful in execu¬
tion, was too strong even for Kilgore. He said, inter alia, “I will
put it this way: that men, some men, if the Germans had ever in¬
vaded this country and conquered us, would have been the first to
collaborate with the conquerors, and have been influential in deci¬
sions being made in Germany.”

Secretary of War Robert B. Patterson said that he was of the opin¬
ion that Meader’s statement “gave a distorted and frequently erro¬
neous picture of the American Zone.” Lieutenant General Dan I.
Sultan, Inspector General of the Army, also denounced Meader,
saying his charges were “unverified.” Yet Meader had based his re¬
port on thoroughly reliable sources. Military officer after officer was
disclosed as corrupt, unsavory, and in collusion with the Nazis.

Among the testimonies was that of Colonel Francis P. Miller,
who had been executive officer of Army Intelligence under Clay and
had formerly been with the OSS. He charged that “Officials selected
for influential economic positions in the military government had
business connections at home that might influence their outlook and
acts.” He called for an intensified use of Army Intelligence to expose
malfeasances in high office.

That December the Kilgore committee uncovered more and more
scandals. Meader introduced documents showing how Draper had
told a visiting party of newspaper editors that the program of purg¬
ing Nazis was holding back economic development.

There were efforts made to obtain a reversal of Truman’s policy

THE FRATERNITY RUNS FOR COVER

245

of removing patents from German hands. The leader of this at¬
tempted reversal was an executive of the U.S. Steel Corporation,
who remained unnamed because of the connections to the Schmitz
and Krupp steel empire. This personage called for a reopening of
the German Patent Office immediately and charged that the Presi¬
dent had jeopardized it by his policy declarations. The steel execu¬
tive also wanted an outright prohibition of inspections of German
plants. Phillips Hawkins pointed out that the reestablishment of pa¬
tent systems and prohibition of search would be disastrous for de-
cartelization.

General Clay had, the committee revealed, sent a stern memoran¬
dum to Draper telling him that denazification was beneficial and
that the failure to denazify industry would have created major
labor-management problems. He rebuked Draper loudly and clearly
for oppposing the removal of Nazis.

Several letters were read from James Stewart Martin showing
how he had been forced into retreat. He named—but the name was
not made public—an American industrialist who was trying to ob¬
tain a penicillin monopoly in Germany by buying up one American
corporation after another with Nazi links, including I.G. He also
charged that lobbying in Washington was allowing ITT, National
Cash Register, and Singer sewing machine company to enter Ger¬
many on special licenses in defiance of presidential orders.

Kilgore was infuriated by Meader’s charges and denounced him
to the press.

James Stewart Martin resigned his position in frustration. His re¬
placement, Phillips Hawkins, married General Draper’s daughter.

In February 1947, Richardson Bronson, formerly Martin’s dep¬
uty control officer, fired one quarter of his staff and announced that
there would no longer be any decartelization of I.G. or any other
heavy industry in Germany. Only small consumer-goods firms
would be affected. The decision was approved by former President
Herbert Hoover, who had received Hermann Schmitz at the White
House in 1931. Hoover’s report at the end of an investigative trip
urged that I.G. and Krupp should be enabled to rebuild Germany.

Those few who raised voices against such goings-on were dis¬
missed by the military arm as “commies.” Draper still had some
critics. Alexander Sacks, formerly of James Stewart Martin’s staff,
charged before the Ferguson Commission on decartelization in 1948

246

TRADING WITH THE ENEMY

that in every way “the policies of the Roosevelt and Truman admin¬
istrations have been flagrantly disregarded by the very individuals
who were charged with the highest responsibility for carrying them
out.” Sacks was dismissed.

As for General Aniline and Film, that indestructible organ of The
Fraternity, all efforts against it by Morgenthau and his successors
in the Treasury proved futile. Robert F. Kennedy as Attorney Gen¬
eral protected the company from dissolution—in his father’s tradi¬
tion. On March 9, 1965, GAF was sold in the largest competitive
auction in Wall Street history. The buyer, offering $340 million, was
an affiliate of I.G. Farben in Germany.

Those who had opposed The Fraternity were not so fortunate.
In 1948 the House Un-American Activities Committee, in one of
its unbridled smear campaigns, named Morgenthau’s trusted associ¬
ates Harry Dexter White and Lauchlin Currie as communist agents.
Based on the uncorroborated testimony of one Elizabeth Bentley,
a self-confessed Soviet spy who was turning state’s evidence, the
Morgenthau Treasury administration was smeared in the eyes of
the public. White and Currie, those deeply loyal enemies of fascism,
those investigators of the Bank for International Settlements, of
Standard, the Chase, the National City Bank, the Morgans, William
Rhodes Davis, the Texas Company, ITT, RCA, SKF, GAF, Ford,
and General Motors, were effectively destroyed by the hearings.
Currie disappeared into Colombia, his U.S. citizenship canceled in
1956, and White died of a heart attack on August 16, 1948, aged
fifty-six, after returning home from an investigative session. While
the surviving Fraternity figures flourished again, helping to form
the texture of postwar technology, those who had dared to expose
them were finished. The Fraternity leaders who had died could sleep
comfortably in their graves—their dark purpose accomplished.

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North Holland Publishing Company, 1958.

Seldes, George. Iron, Blood and Profits. New York: Harper Brothers, 1934.

- Facts and Fascism. New York: In Fact, Inc., 1943.

Stocking, George W., and Watkins, Myron W. Cartels in Action. New York:
Twentieth Century Fund, 1946.

Sutton, Antony C. Wall Street and the Rise of Hitler. Seal Beach, Calif.:
’76 Press, 1976.

“Trials of War Criminals Before the Nuremberg Military Tribunals Under
Control Council Law No. 10,’’ Volume VIII, I.G. Farben case, Nurem¬
berg, October 1946-April 1949. Washington: U.S. Government Print¬
ing Office, 1953.

United States Army Air Force, Aiming point report No. 1. E. 2 of May 29,
1943.

United States Congress. House of Representatives. Special Committee on
Un-American Activities and Investigation of Certain Other Propaganda
Activities, 73rd Congress, 2nd Session, Hearings No. 73-DC-4. Wash¬
ington: U.S. Government Printing Office, 1934.

United States Congress. House of Representatives. Special Committee on
Un-American Activities (1934). Investigation of Nazi and Other Propa¬
ganda Activities. 74th Congress, 1st Session, Report No. 153. Washing¬
ton: U.S. Government Printing Office, 1934.

United States Congress. Senate. Hearings before the Committee on Finance.
Sale of Foreign Bonds or Securities in the United States. 72nd Congress,
1 st Session, S. Res. 19, Part 1, December 18, 19, and 21, 1931. Washing¬
ton: U.S. Government Printing Office, 1931.

United States Congress. Senate. Hearings before a Subcommittee of the

SELECTIVE BIBLIOGRAPHY

251

Committee on Military Affairs. Scientific and Technical Mobilization.
78th Congress, 2nd Session, S. Res. 107, Part 16, August 29 and Sep¬
tember 7, 8, 12, and 13, 1944. Washington: U.S. Government Printing
Office, 1944.

United States Congress. Senate. Hearings before a Subcommittee of the
Committee on Military Affairs. Scientific and Technical Mobilization.
78th Congress, 1st Session, S. 702, Part 16, Washington: U.S. Govern¬
ment Printing Office, 1944.

United States Congress. Senate. Hearings before a Subcommittee of the
Committee on Military Affairs. Elimination of German Resources of
War. Report pursuant to S. Res. 107 and 146, July 2, 1945, Part 7. 78th
Congress and 79th Congress. Washington: U.S. Government Printing
Office, 1945.

United States Group Control Council (Germany), Office of the Director of
Intelligence, Field Information Agency. Technical Intelligence Report
No. EF/ME/1. September 4, 1945.

United States Congress. Senate. Subcommittee to Investigate the Adminis¬
tration of the Internal Security Act, Committee on the Judiciary. Mor-
genthau Diary (Germany). Volume 1, 90th Congress, 1st Session, No¬
vember 20, 1967. Washington: U.S. Government Printing Office, 1967.

United States Strategic Bombing Survey. Aeg-Ostlandwerke GmbH, by
Whitworth Ferguson. May 31, 1945.

United States Strategic Bombing Survey. Plant Report of A. EG. (Allgemeine
Elektrizitats Gesellschaft). Nuremberg, Germany: June 1945.

United States Strategic Bombing Survey. German Electrical Equipment In¬
dustry Report. Equipment Division, January 1947.

Wall, Bennett H., and Gibb, George S. Teagle of Jersey Standard. New Or¬
leans: Tulane University, 1974.

Magazines and Newspapers Consulted

The Nation; The New Republic; The Hour; Friday; In Fact; The Protestant;
The New York Times; The Washington Post; The Washington Times-Herald:
PM; The (London) Times; The New Statesman and Nation; Time and Tide;
The Wall Street Journal.

Select Documentary Sources

Bank for International Settlements*

Telegrams from Merle Cochran to Henry Morgenthau, Jr.: February 14,
March 14, May 9, 1939.

Memoranda from Merle Cochran to Henry Morgenthau, Jr.f April 27, May
9, May 15, 1940.

Reports on meetings of the Bank for International Settlements. 1940-1945.
U.S. Consulate, Basle, Switzerland.

Resolution. H. Res. 188. 78th Congress. March 26, 1943.

Bretton Woods Conference, New Hampshire. Minutes of meetings of the
U.S. delegates. July 10, July 17, July 18, July 19, July 20, 1944.

Memorandum from Orvis A. Schmidt to Henry Morgenthau, Jr. March 23,
1945.

Reports on Currie Mission to Switzerland. Minutes of meetings, memoranda
to the President. April 12, May 2, May 21, 1945.

Bedaux, Charles**

Embassy of the United States of America. Confidential Report. Vichy, May
4, 1942.

Interview with Charles E. Bedaux. Report by American Consulate, Algiers.
October 30, 1942.

War Department Message. Secret. January 4, 1943.

•Files available from Roosevelt Memorial Library, Hyde Park, New York.
••Files available from Department of the Army, Fort Meade, Maryland.

253

254

TRADING WITH THE ENEMY

War Department. Military Intelligence Service. Washington. Report. Janu¬
ary 15, 1943.

Headquarters North African Theater of Operations. U.S. Army Inquiry.
September 5, 1944.

Allied Force Headquarters. U.S. Army. G2. Report. February 14, 1945.

The Chase Bank—Paris*

Morgenthau Minutes. Meeting with Dr. Benjamin Anderson. April 28,
1937.

Department of State Memoranda. June 19, 1940.

Minutes of Treasury Meetings. August 26, 27, 1940.

Correspondence between Chase Bank, Paris and Chateauneuf, France. Au¬
gust 5, October 15, October 24, November 17, 1940.

Memoranda from Winthrop W. Aldrich to Henry Morgenthau, Jr. May 12,
May 25, 1941.

Correspondence between Chase Bank, Paris, German banks, Vichy Head¬
quarters and New York, December 30, 1941, January 3, 10, 15, 23, and 30,
1942; February 2, March 3, March 6, March 24, March 25, March 30, 1942;
April 16, May 7, May 23, June 1, June 4, June 18, June 22, July 20, August

3, September 18, October 9, October 28, and December 31, 1942.

Accounts of Chase Bank, Paris, 1941-1942.

Memorandum from Randolph Paul to Henry Morgenthau, Jr. January 13,
1943.

Accounts, Transactions, German Military Government Orders. Nazi Em¬
bassy, Paris. 1943.

Minutes of Meetings. Treasury, January 4, 13, 1944.

Report. Treasury Investigative Team, Paris, 1944.

Memoranda from Randolph Paul to Henry Morgenthau, Jr. February 3,

4, 1944.

Files available from the Department of the Treasury, Washington, D.C.

SELECT DOCUMENTARY SOURCES

255

Correspondence, Transaction List, Accounts, Memoranda between Nazi
Embassy, Paris, and Chase Bank, May 22, May 30, June 8, June 29, July
3, August 10, August 16, 1944.

Memorandum from J. J. O’Connell, Jr., and Harry Dexter White to Henry
Morgenthau, Jr. September 12, 1944.

Various memoranda, J. J. O’Connell, Jr., and Harry Dexter White to Henry
Morgenthau, Jr. October 20, 27, 1944.

Henry Saxon to Henry Morgenthau, Jr. Memoranda. December 20, 1944.
Treasury Investigative Reports. December 30, 1944.

Harry Dexter White to Henry Morgenthau, Jr. February 12, 1945.

William Rhodes Davis*

Chapter drawn in its entirety from Davis Main File, FBI, 1937-1941, Wash¬
ington, D.C.

Ford Motor Company**

Letters from Maurice Dollfus to Edsel B. Ford, September 19, October 31,
November 27, 1940. October 13, 1941. January 28, February 11, August
15, 1942.

Report by Felix Cole, American Consulate, Algiers, July 11, 1942.

Telegram from John G. Winant, U.S. Embassy, London, to Cordell Hull,
October 20, 1942.

Telegrams from Leland Harrison, U.S. Minister in Berne, Switzerland, to
Cordell Hull, October 29, December 4, 1942.

Reports by John J. Lawler to Henry Morgenthau, Jr., December 9. 10, 11,
1942 (includes transcripts of Edsel Ford’s letters to Maurice Dollfus in Oc¬
cupied France).

•File available from Freedom of Information Office, FBI Headquarters,
Washington, D.C.

••Files available from Charles Higham Collection, Doheny Library, Univer¬
sity of Southern California, Los Angeles.

256

TRADING WITH THE ENEMY

Accounts reports and details of transactions, Ford Motor Company, Dear¬
born and Poissy, December 11-12, 1942.

Report by Randolph Paul to Henry Morgenthau, Jr., May 25, 1943.
Report by Leland Harrison to Cordell Hull, December 13, 1943.

Report by John G. Winant to Cordell Hull, April 3, 1944.

Genera] Motors*

Report by James D. Mooney to Adolf Hitler, n.d. (presumably January
1940).

Letter from James D. Mooney to Adolf Hitler, February 16, 1940.

Summarized statement of Hitler’s conversation with James D. Mooney,
March 4, 1940.

Notes covering James D. Mooney’s visit to Goring, March 7, 1940.

Letters from James D. Mooney to Franklin D. Roosevelt, Rome, Italy,.
March 11, 15, 1940.

Letter from Franklin D. Roosevelt to James D. Mooney, April 2, 1940.

Detailed program of meetings in Berlin and London in 1939 by James D.
Mooney, January 24, 1941.

Letter from James D. Mooney to Franklin D. Roosevelt, February 21, 1941.
Report by J. Edgar Hoover to Adolf A. Berle, Jr., May 1, 1941.

FBI Reports, Various, 1942.

Report by Leland Harrison to Cordell Hull, March 21, 1942.

Report of U S. Embassy, Panama, June 26, 1942.

Report by U.S. Embassy, Buenos Aires, July 20, 1942.

Reports by John G. Winant to Cordell Hull, October 20, 1942.

•Files available from Georgetown University Library, Washington, D.C.,
FBI, and National Archives Diplomatic Records Room.

SELECT DOCUMENTARY SOURCES

257

Report by Jacques Reinstein to General Motors, April 2, 1943.

Telegram from U.S. Embassy, London, to Cordell Hull, May 18, 1944. * ’

Report from U.S. Embassy, La Paz, Bolivia, to Cordell Hull, February 10,
1944.

Report from John G. Winant to Cordell Hull, April 11, 1944.

Princess Stefanie Hohenlohe, Fritz Wiedemann, and Sir William
Wiseman*

Chapter drawn in its entirety from FBI Main Files on these individuals,
Washington, D.C., 1940-1945.

ITT and Radio Corporation of America**

Telegram from American Legation, Bucharest, Rumania, to the Treasury,
January 3, 1941.

Notes and Memoranda by E. H. Foley, Jr. and Herbert Feis to Sumner
Welles, March 24, 25, 26, 1941, and October 9, 1941.

Undated draft on unification of Mexican telephone systems. Treasury files.
1941.

Censored conversation intercept. Hans Sturzenegger and Hugh Williamson,
Basle and New York, June 24, July 3, 1941.

Memorandum from E. H. Foley, Jr., to Henry Morgenthau, Jr., September
8, 1941.

Memoranda from Breckinridge Long to Harry Hopkins, January 5, January
12, 1942.

Seized records, January-March 1942. ITT, South America.

Detailed reports of TTP, South America, State Department File, 1941-1942.

* Files available from FBI.

*’Files available from National Archives and Records Service: Social and
Industrial Records Room, Washington, D.C.

258

TRADING WITH THE ENEMY

Staff memorandum for members of the interdepartmental advisory commit¬
tee on hemisphere communications, Allen W. Sayler, January 13, 1942.

Intercepted conversation. Cia Radio International of Brazil, February 11,
1942.

FBI report. February 14, 1942.

Memo to Thurman Arnold from Robert Wohlforth, February 20, 1942.
Memo from R. T. Yingling to Breckinridge Long, February 26, 1942.
Censorship reports, January-May 1942.

Memoranda to Sumner Welles, from Breckinridge Long, April 21, 1942.

Memoranda of Breckinridge Long on meetings on ITT and
RCA/Consortium, June 26, July 13, July 14, July 10, August 10, August
11, 1942. Also August 25 and September 21, 1942.

Censorship reports May-December 1942.

Special report on Mexican telephone merger, State Department, 1942.
Special report, State Department, August 20, 1942.

Minutes of meetings of the IHCAC, September-December 1942.
Intercepted communications, 1942-1943.

Report on leakage of shipping information. Office of Censorship. July 24,
1942.

Report on evasions of communications regulations and cable communica¬
tions with the Axis. December 7, 11, 14, and 15, 1942.

Report on Axis pressure on ITT. November 18, 1942 (no source given).

Questionnaire, responses, and reports. U.S. Commercial Company to Henry
A. Wallace, 1942-1943.

Breckinridge Long memoranda to the State Department, 1943.

FBI reports. ITT. Main File, 1943.

Censorship intercepts. ITT. April 14, 1943.

SELECT DOCUMENTARY SOURCES

259

Minutes of meeting between W. A. Winterbottom and Breckinridge Long,
August 16, 1943.

ITT. Intelligence report. Bartholomew Higgens to Wendell Berge, Septem¬
ber 20, 1943.

Memorandum to Secret Intelligence Service, Berlin, FBI. September 12,
1945.

Interrogations of Baron Kurt von Schroder, November 20-25, 1945.

Interrogatory reports: numerous. Gerhardt Westrick. 1945 (no day or
month).

SKF*

Memorandum re SKF. Heinrich Kronstein. March 6, 1942.

Secret memorandum. Foreign Economic Administration. Lauchlin Currie
to Oscar Cox, February 4, 1944.

Memorandum for Foreign Economic Administration. Control groups in
Sweden and their German tie-ups, 1944.

Memorandum from Captain W. D. Puleston to Lauchlin Currie. Foreign
Economic Administration, March 15, 1944.

SKF Industries, Inc. report, 1944.

Jean Pajus draft report. Swedish ball-bearing business. May 1944.

Foreign Economic Administration. Memorandum for the files of the Eco¬
nomics Intelligence Division, May 1, 1944.

Miscellaneous telegrams from Ambassador Herschel Johnson in Stockholm
to the Department of State. Encoded, May 1944.

Memorandum by Franklin S. Judson. Foreign Economic Administration,
May 11, 1944.

Telegram. Stockholm Legation to Foreign Economic Administration and
Secretary of State, May 13, 1944.

•Records available from National Archives and Records Service, Suitland,
Maryland.

260

TRADING WITH THE ENEMY

Securities and Exchange Commission. Memorandum covering interviews
with E. Austin and Ernest Wooler. Foreign Economic Administration file,
May 19, 1944.

Memorandum of interview with J. W. Tawresey. Franklin S. Judson, June
7, 1944.

SKF. Introduction and summary. Jean Pajus, Foreign Economic Adminis¬
tration, September 15, 1944.

Telegrams received. American Legation, Stockholm, to Secretary of State,
Washington, D.C., October 9, 1944.

Memorandum by Jean Pajus to Lauchlin Currie and Frank Coe, Foreign
Economic Administration, November 2, 1944.

Complete summary of SKF wartime activities. Jean Pajus, 1945.

Standard Oil of New Jersey*

Report to Sumner Welles by Herbert Feis, March 31, 1941.

Report by John J. Muccio, Charge d’Affaires, U.S. Consulate, Panama, to
Cordell Hull, May 5, 1941.

Report by H. E. Linam, Standard Oil, Caracas, Venezuela, to Nelson Rocke¬
feller, July 9, 1941.

Report by Major Charles A. Burroughs, G-2, Columbus, Ohio, to Head¬
quarters, July 15, 1941.

Report from American Legation, Bucharest, Hungary, to State Department,
August 5, 1941.

Report from E. H. Foley, Jr., Acting Secretary of the Treasury, to Cordell
Hull, October 30, 1941.

Report by E. H. Foley, Jr., to the Senate Special Committee on Defense,
April 30, 1942.

Letter from H. E. Linam, Standard Oil, to Dr. Frank P. Corrigan, U.S. Em¬
bassy, Caracas, Venezuela, June 8, 1942.

* Records available from National Archives and Records Service, Diplo¬
matic Records Room.

SELECT DOCUMENTARY SOURCES

261

Report from Samuel F. Gilbert to Donald Hiss, State Department Foreign
Funds Control, July 14, 1942.

Letter from John J. Muccio, U.S. Embassy, Panama, to Cordell Hull, Au¬
gust 24, 1942.

Report by Leland Harrison, U.S. Embassy, Berne, to Cordell Hull, October
3, 1942.

Report by Daniel J. Reagan, Commerical Attache, Berne, November 6,

1942.

Telegram in code from Leland Harrison to Cordell Hull, December 8, 1942.

Report by Jacques Reinstein to John N. Bohannon, Standard Oil, December
26, 1942.

Report from U.S. Embassy, London, to Cordell Hull, December 29, 1942.

Cable in code from Jacques Reinstein to U.S. Legation, Berne, January 20,

1943.

Telegrams from Leland Harrison, U.S. Legation, Berne, to Cordell Hull,
January 28, 1943.

Report from Adolf Berle to U.S. Legation, Berne, February 27, 1943.

Telegrams from Leland Harrison, U.S. Legation, Berne, April 15, 21, 1943.

Telegrams from John G. Winant to Cordell Hull, May 5, 15, 17, and 18,
1943.

Reports from C. F. Sabourin to F. P. Corrigan, U.S. Embassy, Caracas, Ven¬
ezuela, June 9, 1943.

Report from Frank P. Corrigan to A. T. Proudfit, Standard Oil of Venezue¬
la, June 24, 1943.

Licenses permitting trading with enemy nationals. Various. 1943.

Sterling Products, Inc./General Aniline and Film*
Reports. Foreign Economic Administration, 1942, 1943.

*Records available from FBI and from National Archives Diplomatic Re¬
cords Room and Records Service, Washington, D.C.

262

TRADING WITH THE ENEMY

Memorandum. Charles Henry Lee to John E. Lockwood. Foreign Economic
Administration. July 19, 1941.

Memorandum. Dean Acheson to Jefferson Caffrey. n.d. [1942]

Memorandum. J. Edgar Hoover to Adolf Berle. Alleged German agents in
Brazil. May 26, 1942.

Memorandum. E. Schellnebergger. Chief, Commercial Intelligence. Depart¬
ment of Commerce. June 9, 1942.

Memorandum. Dean Acheson to the American Ambassador, Paraguay.
June 29, 1942.

Memorandum. George Messersmith to Cordell Hull. July 14, 1942.

Memorandum J. Edgar Hoover to Adolf Berle. July 28, 1942.

State Department Memorandum to the Charge d’Affaires, Buenos Aires.
September 11, 1942.

Memorandum. Frederick B. Lyon for Adolf Berle to J. Edgar Hoover. Sep¬
tember 16, 1942.

Memorandum. Robert A. Scotten to State Department. September 21, 1942.

Memorandum. J. Edgar Hoover to Adolf Berle. September 28, 1942.

Memorandum. J. Edgar Hoover to Adolf Berle. October 3, 1942.

Memorandum. Frederick B. Lyon to J. Tannenwald. January 12, 1943.

Correspondence. Philip W. Thayer to State Department. August 1943.

Memorandum. Flemming T. Liggett, FBI, to J. Edgar Hoover. December
30, 1943.

Texas Company*

Enclosure to Dispatch No. 10008 of February 12. 1940, from U.S. Embassy,
Mexico City, to State Department.

•Records available from National Archives and Records Service, Diplo¬
matic Records Room.

SELECT DOCUMENTARY SOURCES

263

Memorandum from U.S. Embassy, Montevideo, Uruguay, to Lawrence
Duggan, State Department. June 5, 1940.

Report of the U.S. Legation, Costa Rica, to Cordell Hull. June 13, 1941.

Military Intelligence Division Report. October 9, 1940.

Memorandum from J. Edgar Hoover to Adolf Berle. February 10, 1942.

Report by A. R. Randolph, Acting Commercial Attache, Guatemala. De¬
cember 8, 1942.

Division of the American Republics Report. December 28, 1942.

Miscellaneous authorizations. A. R. Randolph. 1943.

Memorandum from Leland Harrison, U.S. Legation, Berne, Switzerland,
to State Department. January 27, 1944.

Memorandum from Leland Harrison, U.S. Legation, Berne, Switzerland,
to State Department. January 30, 1944.

Selected Documents

^ ofna

HEADQUARTERS FIFTH CORPS AREA

OFFICE OF THE CORPS AREA COMMANDER

—> WAR OEPj

PORT NATO. COUUMVU*. OHIO CC£

G—2

July 15, 19U

SUBJECT: Standard Oil Company of New Jersey Ships Under Panamanian
Registry.

A. C. of S., G-2,

TO!

War Department
Washington, D* C.

1* A report has been received from Cleveland, Ohio, in. which 2t is
stated that the source of this information is unquestionable, to the
effect that the Standard Oil Company of New Jersey now ships under Pan¬
amanian registry, transporting oil (fuel) from Aruba, Dutch West Indies
to Teneriffe, Canary Islands, and is apparently diverting- about 2Q£ of
this fuel oil to the present German government.

2. About six of the ships operating on this route are reputed to
be manned mainly by Nazi officers. Seamen have reported to the infomam
that they have seen submarines in the immediate vicinity of the Canary
Islands and have learned that these submarines are refueling there. The
informant also stated that the Standard Oil Company has not lost any
ships to date by- torpedoing as have other companies whose ships operate
to other ports.

For the A. C. of S., G-2,

KANK FOR INTERNATIONAL SETTLEMENTS

BOARD OF DIRECTORS*

Ernst Weber, Zurich Chairman

Dott. V. Azzolini, Rome

Y. Breart de Soisanger, Paris

Baron Brincard, Paris

Walther Funk, Berlin

Alexandre Galopin, Brussels

Prof. Francesco Giordanl, Rome

Hisaakira Kano, Tokio

Sir Otto Niemeyer, London

Montagu Collet Norman, London

Ivar Rooth, Stockholm

Dr. Hermann Schmitz, Berlin

Kurt Freiherr von Schroder, Cologne

Dr. L. J. A. Trip, The Hague

Marquis de Vogue, Paris

Yoneji Yamamoto, Berlin

Alternates

Dott. Giovanni Acanfora
Dott. Mario Pennachio
Cameron F. Cobbold, London
Emil Puhj, Berlin

Rome

EXECUTIVE

Thomas H. McKittrick
Roger Auboin
Paul Hechler
Dott. Raffaele Pilotti
Matcel van Zeeland

FFICERS

President
General Manager
Assistant General Manager
Secretary General
Manager

Dr. Per Jacobsson
Or. Felix Weiser

Economic Adviser
Legal Adviser

teth June W.

267

Memorandum fromR.T. Yingling, State Department at¬
torney. to Assistant Secretary of State Breckinridge
Long

February 26. 1942.

Mr. Long:

It seems that the International Telephone and Tel¬
egraph Corporation which has been handling traffic be¬
tween Latin American countries and Axis controlled
points with the encouragement or concurrence of the
Department desires some assurance that it will not be
prosecuted for such activities. It has been suggested
that the matter be discussed informally with the At¬
torney General and if he agrees the Corporation can be
advised that no prosecution is contemplated.

This office feels that no formal opinion of the At¬
torney General for its future guidance is necessary in
view of Resolution XL on telecommunications adopted at
the Consultative Meeting of Ministers of Foreign Af¬
fairs of the American Republics, held at Rio de Janeiro
in January of this year . If the International Tele¬
phone and Telegraph Corporation feels that activities
of the nature indicated above which it may be carrying
on at the present time in Latin America are within the
purview of the Trading with the Enemy Act it should ap¬
ply to the Treasury Department for a license to engage
in such activities.

Le:RTYingling:LEY:SS

268

DEPARTMENT of state

Memorandum of Conversation

smeru coHnrerrm.

date-. 3 ep terror 9, 1942.

subject: Tftl**oaanmlo*tIon Circuits Vltb th* Axis Maintained by
Argentina and Chile.

PA.=rrciPANTSe The Secretary (later); Assistant Secretary Long;

Hr. Raokworth, Legal Adrleer (later); Mr. Bonsai, RA-
Mr. Daniels, RA; Xr. Halle, RA; Mr. HeLortein*. .

Mr. Tannenvali, FT; Mr. deVolf, IM.

CCP'aS TO. L

A-A

Xerorandua of a Meeting la Mr. Long 1 6 Cfflce (Later Adjourned
to the Secretary'* Office)

Mr. Long.pointed out that after months of conversa¬
tion the American interests in the Consortium Trust
(Radio Corporation of America) had done nothing ac¬
tually to bring about a closure of the circuits main¬
tained with the Axis by the Consortium companies in
Argentina and Chile. He said they had proved what de¬
gree of control they could exercise over these compa¬
nies by what had been accomplished in the course of
General Davis' visit to Buenos Aires and Santiago, and
that consequently he had no doubt but what they could
order the companies to suspend the operation of the un¬
desirable circuits. He said that the RCA representa¬
tives were coming to see him at 3 p.m. today. and that
he had in mind telling them to do what was necessary in
order to shut down the circuits by midnight tomorrow
(September 10 ) .

Mr. Bonsai suggested the advisability of informing
the Argentine and Chilean Governments in advance of
the contemplated action, pointing out that the politi-

269

cal consequences of doing otherwise might have wide
ramifications involving the basic policy governing
our relations with the two republics. Specifically, he
said, action taken by the companies in response to an
initiative from this Government to close the circuits
might raise the whole question of control by national
governments over public utilities operating within
their own jurisdiction. He felt that one of the conse¬
quences might be that nationalistic interests would
point out that the public services in these countries
were controlled by Washington, rather than by the na¬
tional governments which should properly have juris¬
diction.

Mr. Long expressed the view that, should the Gov¬
ernments be notified of the proposed action in ad¬
vance, they would immediately call in the Axis
representatives and that then we would have a fight on
our hands. Mr. Bonsai felt that, in any case, we should
be much better informed than we were of what the legal
and political consequences of such action would be be¬
fore we embarked on it.

The suggestion was advanced by Messrs. Daniels and
Halle that it might be sufficient to have the RCA rep¬
resentatives be prepared to issue the necessary orders
immediately when the Department gives them word to go
ahead. This suggestion was based especially on the
possibility that the Chilean Government might cut the
circuits in the near future on its own initiative, and
that since such initiative would lead the country
nearer to a complete diplomatic break with the Axis, it
would be preferable to company initiative.

The meeting thereupon adjourned to the Secretary's
Office, where Mr. Long placed the problem and various
considerations that had been advanced before the Sec¬
retary. The Secretary, citing the vital economic
assistance that we were extending to Argentina, es¬
pecially in the way of iron and steel shipments, said
that we had a right to expect a good deal more coopera-

270

tion in return than we were getting. He said that,
while he had not been in close touch with the situation
in Argentina over the past few months, he felt the time
had come when we should deal more severely with the
Argentine Government. Consequently, he favored Mr.
Long's proposal to ask RCA to have the circuits aban¬
doned by midnight tomorrow. Mr. Bonsai expressed his
view that we should have more information on the provi¬
sions of the franchises under which the companies were
operating before proceeding further. The Secretary
said that he felt the question of what the franchises
provided concerned the Consortium and the Consortium
companies rather than this Government. It was agreed
that, because of indications that the Chilean Govern¬
ment would not oppose company initiative in this mat¬
ter, the Chilean authorities should be notified in
advance. In the case of Argentina, the Secretary ex¬
pressed no objection to our having the company take the
action forthwith.

RA:LHalle:MM

271

Department of state
Memorandum of

OATXi yay 24, 1943.

subject: Cotrnmicat 1 ora .

participants.- Colonel Saraoff, He fi¬
ler, Long.

COPIES TCh RA, TH.

I t alkod to Colonel Samoff on the telephone and e xplalned
to him that v* had r 9330 s to believe that more messages than tho
agreed 700 code-grorupa a week were being sent fron B. A. by the
Axis power* to their Goverrnents. I told him I could not disclose
dem there the source of our Information. In an effort to obtain
additional Information our representatives down there had :ppreached
Hayes. Hayea had seased to then concooperatlve. There may have
teen very sound reasons it y he refused t o disclose tho exact nuxber
of messages cent In code-groupa by each of the Axis representatives
to their Government. However, there didn't seen to bo any reason
why tho managership should not request a report on all code-groups
being sent over a poriod of tine, day by day, and to Include a
report on all 'belligerents, and that If he would obtain that
Information through confidential channels vm would be appreciative.

I suggested It bo not done by telegraph or telephone and suggested
the mall, but offered to make the pouch available.

Colonel Samoff replied that he would taj< to Ur. 'Wlnteroottcn
but he saw no reason why we should not do it and that he vmld
cornsamicato with us If they wanted to use the pouch.

A-L:BL:lag

Ueaoncco fr 8.A. by Axle powero to their Oovta

272

May 25 1943

Secretary Morgenthau

Randolph Paul

A short time ago a brief investigation was made of
the files of the Ford Motor Company of Dearborn, Michi¬
gan, in order to determine the extent of its relation¬
ship and its control over its French subsidiary. Since
the investigative report is rather lengthy, I have at¬
tached hereto a summary thereof which discloses that
from the fall of France to July 1942—the date of the
last letter in the files from Ford of France to Ford of
America: (1) the business of the Ford subsidiaries in
France substantially increased; (2) their production
was solely for the benefit of Germany and the countries
under its occupation; (3) the Germans have "shown
clearly their wish to protect the Ford interests" be¬
cause of the attitude of strict neutrality maintained
by Henry and Edsel Ford; and (4) the increased activity
of the French Ford subsidiaries on behalf of the Ger¬
mans received the commendation of the Ford family in
America.

I am sure you will want to read the attached report.
We propose to submit informally copies of the investi¬
gative report to Military Intelligence, Office of Na¬
val Intelligence, Federal Bureau of Investigation and
other similar investigative agencies.'

If you are in agreement, please so indicate below.

(Initialed) H.E.P.

Attachment.

(Signed) H. Morgenthau, Jr.
Approved: -

RRShwartz rhb 5/22/43

273

By Jean Pajus-June 1944

Memorandum by Jean Pajus. Foreign Economic Adminis¬
tration

MEMORANDUM ON SKF

June 1944.

In the current investigation on SKF the following
points are important:

1. The important foreign files, including the
correspondence between SKF in this country and SKF
Sweden, and other foreign countries have been de¬
stroyed by order of the American SKF officials. Ac¬
cording to an interview with Mr. William Batt it is the
custom of the American SKF to destroy its files every
seven years. It is extremely significant that Mr. Batt
ordered the destruction of all foreign correspondence
for the years prior to 1941 and 1942. Orders to destroy
these files came down three days after Sweden was
blocked by the United States Treasury in 1941.

2. Ever since the war began the Swedish company
has been giving orders to its American affiliate with
respect to volume of production, prices, and other
matters of major policy. At one time it appears that
the Swedish company deliberately withheld the ship¬
ment of necessary machinery to curtail production in
this country for about eight months. All ball bearing
machinery for SKF companies must be imported from Swe¬
den and, consequently, the parent company can dictate
changes in ball bearing production in foreign coun¬
tries .

3. All of these orders from the Swedish parent
company came through the Swedish Legation in Washing¬
ton, thus escaping the normal channels of censorship.

274

4. There is a very considerable investment of Ger¬
man capital in the Swedish company. At the time of the
merger of the German companies into the VKF Combine,
under control of the Swedish SKF, a very substantial
block of shares in the Swedish company was given to
Germany. The shares received by the Germans were so-
called B shares-those without voting rights-but the
evidence is clear that the Germans have a very impor¬
tant position in the determination of all major mat¬
ters of policy. In fact, the former manager of the
German ball bearing is now manager of the Swedish com¬
pany.

5. The largest share of SKF's production is lo¬
cated in Axis-controlled Europe, 52% in Germany and
64% in Germany and France.

6. There is considerable evidence of a direct Ger¬
man interest in the United States Company. Just prior
to the last war the Hess-Bright Company, owned by the
German Munitions Trust was purportedly sold to the
Swedish SKF. The Investigation made by the Alien Prop¬
erty Custodian at that time indicated great doubt in
the validity of the sale to the Swedes. A cash transac¬
tion of $2,800,000 reported paid to the Germans by the
Swedish Company for the property was never traced. In
fact the whole investigation was a fraud, since the fi¬
nal report submitted by the United States Secret Ser¬
vice was written by the vice president of SKF. Other
evidence indicates that the Swedish company merely
acted as a front for the German company and that that
situation still exists.

7. Further evidence to show how the German and
Swedish interests are inextricably linked is the fact
that in 1912 SKF Sweden purchased 50% of the Norma Ball
Bearing Company, Cannstadt, Germany. This purchase
was necessary in order to secure access to German pat¬
ents and to make sales in the German market from which
it was previously excluded by the German Ball Bearing
Cartel. In 1912 they joined the German cartel and be-

275

came a licensee under the Conrad Patent. In 1929 the
Norma Company was merged into VKF and a further German
interest in the Swedish Company took place.

The Norma Company of America, a branch of the Ger¬
man Norma Company, was taken over by the Alien Property
Custodian upon our entering into the war and, subse¬
quently, was sold to American interests in 1919. At
that time William Batt acted as an attorney in fact for
the Norma Company. This indicates how closely knit Mr.
Batt's interests with the Germans have been in the
past.

8. Until 1940 Mr. Batt was a member of the board of
directors of the American Bosch Company which has
since been seized by the U.S. Alien Property Custo¬
dian. This company attempted to cloak its German own¬
ership under a purported sale of the properties to
Swedish interests affiliated with SKF just prior to
our entrance into the present war. The Alien Property
Custodian nevertheless seized the properties on the
ground that the transfer was fraudulent. It is re¬
ported that, at the time of the American Bosch investi¬
gation, a memorandum was prepared by the'Treasury
Department on Mr . Batt ’ s connections with German com¬
panies, which was sent to the White House. The memo¬
randum raised the question of the desirability of
allowing Mr. Batt to hold a prominent position in the
War Production Board in the light of his business af¬
filiations .

9. Numerous letters in the SKF files indicated
that Mr. Batt was under orders from the Swedish company
to supply the Latin American market, irrespective of
current war orders in the United States; and that all
sales in the United States should be based primarily on
the long-term business interests of the company rather
than the needs of the war effort.

At the present time an FEA representative is in
Sweden attempting to purchase the SKF production in
Sweden for $30,000,000. In the light of the above facts

276

it would seem that action other than that of purchase
could be effected to get the results desired.

The following steps are suggested:

a. Declare null and void the voting trust
agreement now placed by Swedish SKF in the
hands of Mr. Batt.

b. Seize the SKF properties in the United States,
placing them under the Alien Property Custo¬
dian .

c. Place on the U.S. Proclaimed List all SKF com¬
panies in Sweden and Latin America.

d. Encourage American firms to export ball bear¬
ings to Latin America to compete with the SKF
monopoly in those countries.

e. Place on the U.S. Proclaimed List all major
Swedish companies affiliated with SKF., i.e.,
Asea, Atlas Diesel. Separator, Etc.

f. Block all transfers of funds from Latin Ameri¬
can subsidiaries to Sweden.

g. Eliminate the Swedish cartel in ball bearings
in Germany after the war.

h. Eliminate the Swedish monopoly in France and
Japan.

i. Seize all patents belonging to SKF Sweden and
SKF Germany and other patents held by SKF sub¬
sidiaries in Europe.

277

TREASURY DEPARTMENT

INTWW OWW1CW COMMUNICATION

DATS

#•

KB 1 2 1945

Secretary Morgenthau

Harry White

BA--,

A>i

You will recall that on September 12, 1944, we reported to
you that a study of an exchange of correspondence in New York
between Chase, Paris, and Chase, New York, from the date of the
fall of France to May 1942 disclosed that (1) the Paris branch
collaborated with the Oermana; (2) Chase was held in "very special
•steam" by the Germans; (3) the Paris manager was "very rigorous"
in enforcing restrictions unnecessarily against Jewish oroperty;
and (4) the home office took no direct steps to remove the Paris
manager as it might "react" against their interests. We were then
aware that the Paris branch of Chase acceded to tbs demands of the
Germans to continue normal operationseven though both the Guar¬
anty and National City had refused and substantial liquidation
ensued.

On the basis of this report, you agreed with our recommenda¬
tion to investigate Chase in France. As of the present date our
investigation of the Chase records in France coni inns the above
mentioned findings, and discloses the following additional infor¬
mation:

1. S. P. Eailey, an American citizen who was in charge
of the Paris office in June 1940, felt that it was desirable
to, and actually commenced to, liquidate the Paris office.

Some time thereafter arkl certainly by June 1941 his powers
were revoked when the home office conferred authority on
Niedermann who thereafter successfully ran the Paris office
during German occupation, and Bertrand who remained at
Ch&teauneuf in then unoccupied France.

2. Although Chase in New York did not, so far as is
presently known, send instructions for the Paris branch
after February 4, 1942, there is thus far no evidence that
Chase even attempted to veto any transactions of the Paris

278

- 2 -

office or between the office in the Free Zone and the
office in Paris even when such contemplated transactions
were the subject of requests for instructions.

3. Between May 1942 and May 1943, deposits in the
Paris office virtually doubled. Almost half of the increase
in deposits took place in two German accounts.

4. About a month after United States’ entry into the
war, the Chase attorney in Paris advised that it was a
natter of "the most elementary prudence” to block American
accounts notwithstanding that no such instructions had been
issued by the occupying authorities. We are awaiting further
re'ports as to whether the suggested action was taken.

5. In May 1942 the Paris branch advised a Berlin bank
that certain instructions of the latter had been carried
out and that the Paris branch "are at your disposal to con¬
tinue to undertake the execution of banking affairs in
France for your friends as well as for yourselves ,l

I will keep you advised of further developments in the
investigation of Chase and the other American banks in Paris.

In this connection you might be interested in reading the
attached cable received yesterday from Hoffman in Paris which
describes a meeting he held with Mr. Larkin who was apparently
sent to Paris by Aldrich to try to straighten up the Chase
offices. Larkin reported that Aldrich and the New York board of
Chase were very^much concerned over the situation in the Paris
office of Chase," and that it was Larkin's job "to get to the
bottom of the situation and make the necessary adjustments in
personnel.” It is significant that Larkin emphasized the fact
that Chase, Hew York, had been cut off from the Paris branch since
the United States entered the war. This does not agree with our
findings which disclose that between the date of the fall of
France and May 1942, Chase, New York, was kept advised about
activities in Chase, Paris.

Attachment.

279

RECEIVES

DEPARTMENT OF STATE

Ref: 1654/21/*13
Ko: 366

iqax bin | PM 3,2W-

^ * V,S1DN ° f

yt ' O'VISION Of

(*^ ^ jijn < 1^4? )| *• ,J .SICATK^

U 6 *' // AND RECORDS

r JUN 2 11943
J »1 AMERICA* R£FIJ6(JCS
pEPtfTvyiT Of SfATE

JUli

'- // ' 4 “j>£Nt of '^fy

’ '' I Majesty's Ambassador presen^$Snis

' 'co4jpli/ents to the Secretary of State an& has the

'-_ V

honour to state that His Royal Highness, the Duke
of Windsor, Governor of the Bahamas, has enquired
whether the United States Government would be so
good as to grant exemption x*ron United States
censorship to the correspondence of the Duchess
of Windsor. Lord Halifax would be grateful for
such sympathetic consideration as can properly
be given to this enquiry.

ERITISH EMBASSY,

WASHINGTON, D.C.,

31st May, 1943.

DEPARTMENT OF

Assistant secre

June IS, 1943

Memorandum

I believe that the Duchess of Windsor should
emphatically be denied exemption from censorship.

Quite aside from the more shadowy reports about
the activities of this family, it is to be recalled
that both the Duke and Duchess of Windsor were in
co ntact with Mr. James Moonev. of Gen eral Motors,

•V •, of a negotiated

p eace in winner of 1B40: tfrftt they have

maintained correspondence with LEedaux^ now in prison
in North Africa and under charge & M trading with
the enemy, and possibly of treasonable correspondence
with the enemy; that they have been in constant con¬
tact with..Axel Wenner-G ren. o reaantlT on ^arVUat

for-Wtfspicious activity; etc. The Duke of Windsor has
been finding many excuses to attend to “private busi¬
ness" in the United States, which he is doing at
present.

There are positive reasons, therefore, why this
iamiunity should not be granted — as well as the
negative reason that we are not according this privi¬
lege to the wife of any American official.

A-B:AAB:ES

Index

Abetz, Otto, 33, 46-49, 206-207,
214

Abs, Hermann, 240
Acheson, Dean: at Bretton
Woods, 34-36; Davis Oil
and, 88; Ford Company and,
182; ITT and, 120; SKFand,
143-44, 145, 149; Standard
Oil and, 61-62, 76-77, 81
Adam-Opel (GM subsidiary), 189,
192, 195-96

Admiral Graf Spee (battleship),
169

Agfa company, 154
Agricultural Advisory Commis¬
sion, 25

Aguirre, Ernesto, 128
Alba, Duke of, 114
Alba Pharmaceutical Company,
163

Albert, Dr. Heinrich, 115, 163,
175-81

Aldrich, Winthrop (of Chase Na¬
tional Bank), 41, 43-44, 46,
49-52; BIS and, 34, 40; SS
and, 152

Algiers, BIS in, 32
Alien Property Custodian, Office
of (see also Crowley, Leo T.):
GAF and, 158-60; SKF and,
139 , 147—48, 161; Sterling
and, 162, 172

All-American Cables Office,
123-24

All Honorable Men (Martin),
239-40

Allied Military Government, 234
Allied War Council, 205

Almazan, Juan, 95-96
Alpa (Nazi firm), 196
Ambruster, Howard, 165, 172
America and a New World Order
(Howard), 187, 238
America First movement, 92, 178
American Agriculturist , The (jour¬
nal), 25

American Chemical Society, 183
American Cyanamid, 161
American I.G. Chemical Corp.:
Edsel Ford and, 177; GAF
and, 57-58, 151-52, 154-55;
Standard Oil and, 54-55, 57;
succeeded by General Ani¬
line and Film, 57
American Liberty League, 183,
186

American Magazine. 56
American Nazi party, 186
American Red Cross, 40, 145
American Telephone and Tele¬
graph Company (AT&T),
114

Anderson, Sir John, 37
Angell, Frank, 217
Ansco, 153

antiblack and anticommunist
movements, Du Pont in¬
volvement in, 183, 186
anti-Semitism (see also Ausch¬
witz; Jews): at Ford Motor
Company, 175-76, 178-79;
among German-Americans,
216; at GM, 183, 186, 188-
89; at SKF, 142; in U.S. State
Department, 104
Antonescu, General Ion, 58

281

282

INDEX

AO (Organization of Germans
Abroad), 154, 156, 213, 214
Arabian-American Oil Company
(Aramco), 100-104, 106-11
Arab Legion, 99
Arab world, Hitler and, 99-100
Aramco, see Arabian-American
Oil Company

Armanda Capriles and Company,
123

Arnold, General Henry H.

(“Hap”), 143, 236
Arnold, Thurman, 65-73, 172
A sea, 142

Asia and the Americas (journal),
102

Associated Bunds organization,
216

Associated Press, 28
AT&T, 114
Auboin, Roger, 27
Auer, Erhard, 176
Auschwitz: BIS and, 39-40; GAF
and, 152; postwar treatment
of, 234, 236

Austria National Bank, gold
looted from, 26, 233n., 237
Austrian State Opera, 58
aviation fuel, wartime trade in,
55-57, 72-73, 242
Axis powers: Ford and, 179-82;
ITT and, 131, 133; Standard
Oil and, 64

Azzolini, Vincenzo, 24

Backer, Mrs. Dorothy S., 107
Bahrein, Sheikh of, 103
Bailey, S. P., 50

ball bearings, international war¬
time trade in, 137-50
Banca Commerciale Italiana, 45
Banco Aleman Transatlantico, 47,
142, 170-71

Bank for International Settle¬
ments (BIS), 23-40; at Bret-

ton Woods, 34-40; Bank of
England and, 23, 27-31;
Bank of France and, 23, 24,
27, 38; Chase Bank and, 24,
34, 39, 40, 41; Davis Oil and,
83,92; Farben and, 166; Ford
Motor Company and, 180-
SI; GAF and, 152; GM and,
189-90; ITT and, 115; post¬
war role of, 233, 237, 241;
Standard Oil and, 40, 79
Bankhead, William, funeral of,
105

Bank of Belgium, gold looted
from, 23, 38, 39, 233/t.

Bank of England: BIS and, 23,
27-31; Czech gold transfer
and, 27-29; Standard Oil
and, 80

Bank of France: BIS and, 23, 24,
27, 38; Ford Motor Company
and, 181; Hitler and, 206;
Standard Oil and, 80, Wind¬
sor and, 206
Bank of Italy, 23, 24
Bank of Sweden, 31
Banque de Paris et des Pays-Bas,
43, 45, 207

Banque Frangaise et Italienne
pour l’Amerique du Sud,
45

Barco pipeline, 95
Barth, Alfred W., 44, 51
Baruch, Bernard, 72
Batt, William L. (of SKF), 137-
43, 146-49

Bayer Company, 162-63, 166,
168, 170-72

Beacon Research Laboratory, 97
Beaverbook, Lord, 219, 220—21
Bedaux, Charles (systems inven¬
tor), 186, 198, 201-11, 243
Bedaux, Fern Lombard, 202-204,
207

Beekman, Gustave, 106-108
Beer Business (Germany), control
of, 86

INDEX

283

Behn, Nando, 127
Behn, Sosthenes (of ITT), 113-15,
118-24, 129, 131-35; AO
and, 215; GAF and, 158; GM
and, 188, 192; National City
Bank and, 41; post-war role
of, 238; SKF and, 137-38,
142; SS and, 152; Standard
Oil and, 57
Bennett, Jack, 244
Bensmann, Nikolaus, 96, 201
Bentley, Elizabeth, 246
Berge, Wendell, 173
Berger, Bernard, 101
Berle, Adolf A. (of U.S. State De¬
partment): Davis Oil and,
88-90; Farben and, 169; GM
and, 195, 198; Standard Oil
and, 60; Windsors and, 206
Bernstein, Colonel Bernard,
242-43

Bertrand, Albert, 46-48, 52
Beyen, J. W., 27, 28, 34, 35
Beyond Our Shores the World
Shall Know Us (RCA), 132
Biddle, Francis (attorney general):
AO and, 224-31; Bedaux
and, 209-10, Chase Bank
and, 49; GAF and, 158-60;
Proclaimed List and, 60,
Standard Oil and, 60, 66, 68;
Sterling and, 172-73; Welles
and, 106

BIS, see Bank for International
Settlements
Black Legion, 186
Black Luftwaffe, 83
Blair, Frank A., 163
Blume, Hans, 125, 128
Blume, Kurt, 128
Board of Economic warfare, 64-
65, 121

Board of Trade for German-
American Commerce, 155
Bofors munitions empire, 138
Bohle, Emst-Wilhelm, 213n.
Boisanger, Yves Breart de, 24, 32

Bone, Senator Homer T., 69-73,
172

Borchers, Dr. Hans, 223
Borchers, Heinrich, 192-93
Bormann, Martin, 203
Bosch, Carl, 162, 175
Bosch company, 139
Brady, William G., Jr., 74
Brasol, Boris, 176
Braun, Miguel, 74—75
Bretton Woods, International
Monetary Conference at,
34-40

Bretton Woods Act, 37
Brewster, Senator Owen, 106, 108,
237

British-American Chamber of
Commerce, 29

British Cable and Wireless, 124—
26, 128, 130-31
British Intelligence, 56
British Ministry of Economic
Warfare, 143

British Purchasing Commission,
141, 219, 220
Bronson, Richardson, 245
Broun, Heywood, 63
Brown, Edward E. (Ned), 34, 36
Brown Brothers, Harriman, 243
Buchman, Frank, 203
Bullitt, William C. (U.S. ambas¬
sador to France): Aramco
and, 101-102, 104-105; BIS
and, 26; GAF and, 159;
Standard Oil and, 58; Welles
and, 104-105; Windsors and,
203, 206

Burke, Thomas, 126
Burrows, Major Charles A., 61
Butler, General Smedley, 184

Caesar, Hans-Joachim: Bedaux
and, 206; Chase Bank and,
41,46-49; Davis and, 87; ITT
and, 115

284

INDEX

Cahill, John T., 51
California Standard, 95, 103
Caltcx, 98-101, 104, 108-11
Canaris, Admiral Wilhelm, 213,
232

Capehart, Senator Homer, 135
Cardenas, Lazaro, 86
Carillo, Alejandro, 86
Carp, Werner, 240
Chamberlain, Neville (British
prime minister), 27-28, 204-
205, 214

Chase Manhattan Bank (formerly
Chase National Bank), 41
Chase National Bank: Bedaux
and, 206; BIS and, 24, 34, 39,
40, 41; Ford Motor Company
and, 181; GAF and, 41, 155;
Nazi account of, 41-52;
Rockefeller ownership of, 40,
41; Standard Oil and, 53, 78;
Sterling and, 41

Chemical Company (Farben sub¬
sidiary), 154

Chemie (I.G.) (Farben subsidiary),
55, 155, 238-39, 243
Chemnyco (Farben subsidiary),
75, 157

Chicago Tribune, Hitler interview
in, 176

Churchill, Winston (British prime
minister): BIS and, 28; Ibn
Saud and, 102, 103; war pol¬
icy of, 218; Windsor and, 204,
205

Cia Argentinia Comercial de Pes-
queria, 74
CIDRA, 123

CIO, 85, 87-88, 91-92, 94
Circle of Friends (financiers of
the Gestapo), 41, 103, 114,
153

Clark, Bennett C., 107
Clark, Charles, 82
Clark, Edward Terry, 164
Clark, Thomas C. (Tom), 94

Clark’s Crusaders, 183
Clauson, Pete, 95
Clay, General Lucius D., 236,
244-45

Clayton, Will, 117
Clemm, Karl von, 83-85, 86,
90-94

Clemm, Werner von, 83-85, 86,
90-92, 93, 94
Cochran, Merle, 26-31
Coffee, John M., 33, 189, 206
Cole, Felix, 180-81
Collier, Harry D. (of California
Standard), 57, 64, 103-104;
Caltex and, 102; Davis Oil
and, 93-94; Texas Company
and, 98

Compagnie Generate, 124
Compania Veracruzana, 92
Condor airline, 60, 62
Coolidge, Calvin, 163
Corcoran, David, 166
Corcoran, Thomas (Tommy), 166,
171-72

Coudert, Frederic, 30
Council of Twelve, 153, 213
Crockett, Alice, 219-20
Crowley, Leo T. (alien property
custodian): GAF and, 158—
61, 237-38; SKF and, 139;
Sterling and, 163-64, 172
Cuba, GM in, 194
Cummings, Homer S. (attorney
general), 98, 155-56
Currie, Lauchlin (of White House
Economic Staff)'- at Bretton
Woods, 40; denounced by
HUAC, 246; Ford Motor
Company and, 181-82; post¬
war mission of, 242; SKF
and, 140-41, 143-45, 149
Curtis-Wright Aviation Corpora¬
tion, 140

Czech National Bank, gold looted
from, 23,26-31,38-39,233*.,
237

INDEX

285

Daniell, Raymond, 240-41, 242
DAPG (Standard Oil German
subsidiary), 77
Darlan, Jean, 206
Davis, General Robert C., 40, 124,
127-30

Davis, William Rhodes (of Davis
Oil Company), 83-93
Davis Oil Company, 83-94; Ache-
son and, 88; Berle and, 88-
90; BIS and, 83, 92; Farben
and, 83, 85; GM and, 83; ITT
and, 115; Texas Company
and, 96

Day, Stephen A., 157
Dearborn, Richard J., 72, 96
Dearborn Independent (Ford
newspaper), 175-76
Death’s Head Brigade, 152
de Gaulle, General Charles A.,
133, 193

Denker, Paul, 236
Deterding, Sir Henri, 54, 85
Deutsche Bank, 237
Deutsche Ubersseeische Bank, 47
Deutsche Landersbank, 237, 239,
240

De Wolf, Francis, 122, 123
diamond trade: Chase Bank and,
45, 49, 51; von Clemms and,
83-84, 86, 90-94
Dickson, George, 117
Dicto (cargo ship), 144
Diesel company, 142
Dillon, Read (bankers). Hitler
and, 155, 235
Dinkelbach, Heinrich, 240
Dodd. Thomas E., 39
Dodd, William E., 188
Dodge, Joseph, 235-36
Dollfuss, Maurice, 178-82
Donovan, William, 117
Draper, Brigadier General Wil¬
liam H., 149, 235-37, 242-
46

Dresdnerbank, 153, 196, 237

Dulles, Allen (of Sullivan and
Cromwell law firm): Chase
Bank and, 43; Farben and,
164; Ford and, 175; ITT and,
132; postwar role of, 238
Dulles, John Foster (secretary of
state; member of Sullivan and
Cromwell law firm): Belgian
Bank and, 30; Chase Bank
and, 43; Farben and, 30, 164;
Ford and, 175; GAF and,
161; ITT and, 115; SKFand,
139

Dunnington, Walter G., 98
du Pont, Irenee, 183-84, 186-87
du Pont, Lammot, 163, 183, 186,
202

du Pont, Pierre, 183
Du Pont family: Farben and, 243;
FDR overthrow plotted by,
184-86; GAF and, 152; GM
and, 182-86; Hitler and, 192,
195; Standard Oil and, 55
Durr, C. J., 122, 129
Duvoisin, David, 76, 78
Dwyre, Dudley G., 171

Eastman Kodak: GAF and, 161;

ITT and, 117-18
Eden, Anthony, 34
Edward VIII of England, see
Windsor, Duke of
Einzig, Paul, 27-28; In the Center
of Things, 28

Eisenhower, General Dwight D.;
Bedaux and, 209; North Afri¬
can invasion planned by, 32;
postwar policies of, 235, 236,
240-41

Electrolux: Goring and, 87; SKF
and, 138, 142
Emanuel, Victor, 160
Epoca (journal), 60
Erca (Nazi firm), 196

286

INDEX

Erhardt, Ludwig, 223
Erickson, P. E., 124
Ericsson Company, 121
Esso 4 (Standard Oil’s Rhine
barge), 77
Ethyl company, 55
European Standard Corporation
(ITT in Europe), 120-21
Eurotank, 83, 84, 85, 89, 92, 93
Export-Import Bank, 123

Fahey, Charles, 242
Farben (I.G.) industrial trust (see
also Ilgner, Max; Schmitz,
Hermann), 151-73; AO and,
213, 216, 220; Auschwitz
and, 152; Bedaux and, 201;
Berle and, 169; BIS and, 166;
Chamberlain and, 27; Davis
Oil and, 83, 85; Dulles and,
30, 164; Ford Motor Com¬
pany and, 54, 163-64, 179—
80; GAF and, 151-61, 163,
168, 170; GM and, 183, 197,
239; Hitler overthrow plotted
by, 218; intelligence network,
see N.W.7; ITT and, 115,
133; postwar treatment of,
234-46; Roosevelt letter on,
234; SKF and, 139; Standard
Oil and, 54-58, 67-71, 72,
74-75, 76-77, 79, 82, 239-40,
245; “Statistical Branch" of,
154; Sterling Products and,
155, 161-73; systems of, 201;
Texas Company and, 95, 97
Farish, William S., 53, 56-60, 63-
74, 75

Farish family, 73
Fath, Creekmore, 42, 73
FBI (Federal Bureau of Investiga¬
tion; see also Hoover, J.
Edgar): AO and, 213, 2lb-
32; Aramco and, 107-10; Be-
deaux and, 209-10; Chase

Bank and, 45; Davis Oil and,
85, 87, 89, 90, 93; GAF and,
155; GM and, 193-95, 197;
ITT and, 128, 131-32; sex¬
ual deviants pursued by, 105-
108

Federal Communications Com¬
mission, 122, 128-29
Federal Reserve Bank: BIS and,
23, 31, 33; Belgian gold and,
30; Chase Bank and, 52; New
York Post financed by, 107;
Standard Oil and, 80
Fellgiebel, General Erich, 132,
238

Ferguson Commission, 246
Fezandie and Sperrle, 157
Fifth Column, 101, 108
Financial News, 27
First National Bank of Boston, 83
First National Bank of New York,
23

Flack, Joseph, 79
Flynn, Errol, 203
Focke-Wulf company: ITT and,
113, 115; postwar disposition
of, 243; SKF and, 137
Foley, Edward H., Jr., 62
Ford, Edsel, 175, 177-82; Ameri¬
can I.G. and, 175; Farben
and, 54; GAF and, 151, 155;
ITT and, 117; Sterling Pro¬
ducts and, 163; trucks sold to
enemy by, 75, 180-81
Ford, Henry, 175-78, 180, 182;
AO and, 215, 220; BIS and,
180-81; Farben and, 163;
Hitler and, 175-77, 189, 193;
International Jew, The, 175—
76; ITT and, 117-18; Stan¬
dard Oil and, 54
Ford Motor Company, 175-82;
Acheson and, 182; anti-
Semitism at, 175-76, 178-79;
Bank of France and, 180; Be¬
daux and, 206; Chase Bank
and, 180; Farben and, 180;

INDEX

287

ITT and, 115, 117-18; SKF
and, 137; systems of, 201
Foreign Economic Administra¬
tion: GAF and, 160; postwar
operation of, 237; SKF and,
142, 148-49

Forrestal, James V.: GAF and,
155; ITT and, 133; postwar
policies of, 235; Standard Oil
and, 59; suicide of, 233; Texas
Company and, 96-97, 99,
102, 104

Fortune magazine, 138
Foxworth, Percy, 221, 224
Franco, Generalissimo Francisco:
Chase Bank and, 42; ITT
and, 114, 115, 120; Standard
OH and, 80-82; Texas Com¬
pany and, 95

Frank-Fahle, Gunther, 236-37
Fraser, Ingram, 219, 220
Fraser, Leon, 24, 33, 34, 35
Fraternity, The, defined, 10-12
Freon, GM and, 197
Freudenberg, Richard, 237
Friends of New Germany, 214
Funk, Dr. Walther (Reichsbank
president): BIS and, 23, 26,
35, 39, 40; Chase Bank and,
43,46; Ibn Saud and, 99; ITT
and, 116; postwar findings
on, 241-42

GAF, see General Aniline and
Film

Gallagher, Ralph W„ 74, 79-80,
82

Galopin, Alexandre, 24, 29-30
Gantt, Robert A., 121
General Aniline and Film (GAF):
American I.G. and, 57-58,
151-52, 154-55; AO and,
216, 220, Auschwitz and,
152; BIS and, 152; Chase
Bank and, 41, 155; Farben

and, 151-61, 163, 168, 170,
Ford Motor Company and,

151, 155, 175, 177; GM and,

152, 183; ITT and, 158; post¬
war status of, 237-38, 243,
246; SKF and, 139; Standard
Oil and, 160, Texas Company
and, 97

General Dyestuffs, 158, 160
General Electric, 244
GeneralMotors(see also Mooney,
James D.), 182-99; anti-

Semitism at, 183, 186, 188—
89; Berle and, 195, 198; BIS
and, 189-90, in Cuba, 194;
Davis Oil and, 83; Farben
and, 183, 197, 239; GAF and,
152, 183; ITT and, 115, 116,
188, 191, 192; Standard Oil
and, 55; systems of, 201
Georgetown University, Mooney
diaries at, 191
Gerard, James W. t 79
German-American Bund, 186
German-American Business
League, 215-16

German-American Commerce As¬
sociation Bulletin, The, 46,
195

German Americans, anti-Semit¬
ism among, 216

German Economics Ministry, 151
German Import-Export Corpora¬
tion, 87

German Secret Service, 156
German TransOcean News
Agency, 103

Germany ( see also Nazi Ger¬
many), postwar reconstruc¬
tion of, 37, 234-35
Gestapo (see also Himmler, Hein¬
rich; Schellenberg, Walter):
AO and, 218, 222, 225; Be-
daux and, 207; BIS and, 24,
29, 39; financing of, 41, 103,
114, 153; Chase Bank and,
41,44, 48; Davis Oil and, 83;

288

INDEX

Gestapo (Corn.)

GM and, 195-96; ITT and,
113, 118; postwar treatment
of, 237; Schroder (of GAF)
and, 153; Texas Company
and, 97, 102-103
GM, see General Motors
Goddard (Theodore) and Com¬
pany, 227

Goebbels, Dr. Joseph, 59, 213
gold: financiers’ emphasis on, 201;
Nazi looting of, 23-40, 233,
237, 241-42

good neighbor policy, Standard
Oil violation of, 68
Goring, Hermann: art collection
of, 48; BIS policy opposed by,
32; Davis Oil and, 83, 87-91;
Ford and, 176-77; Four-Year
Plan of, 152, 158; GM and,
183-84, 192-93, 195; ITT
and, 114; quoted, 165; SKF
and, 137, 138, 147; Standard
Oil and, 54, 58; Texas Com¬
pany and, 95; Windsors and,
204

Gorman, Francis J., 204
Grand Mufti of Jerusalem, 99-
100, 103

Grasselli company, 163
Gray, William Steele, Jr., 98
Great Britain and the World (jour¬
nal), 102-103

Griffis, Stanton, 146, 149-50
Grobba, Dr. Fritz, 103
Grube, Colonel Wilhelm, 120-21
Guernsey, diamond smuggling in,
45

Guffey, Senator Joseph F., 85, 91
Gunther, Christian E., 144
Gyssling, George, 223

Hackworth, Green H., 62
Hague Memorandum, 57

Halbach, Ernest K., 157-61, 238,
242-43

Halifax, Lord, 198, 214, 218-19,
221

Hallauer, Martin, 130
Hamberg, Harald, 146
Hamilton, Duke of, 203
Hardy Bank, 90
Harriman, Averell, 243
Harris, Henry Upham, 98
Harrison, Earl G., 172-73
Harrison, Leland (U.S. minister to
Switzerland): Davis Oil and,
94; GM and, 197; Standard
Oil and, 75-76, 78
Hasiam, R. T., 82, 239
Havero Trading Company, 124
Hawkins, Phillips, 245
Hayes, Carlton J. H., 80, 120
Hayes, George W., 129-30
Healey, James E., Jr., 51-52
Hefferich, Emil, 41
Heider, Carl von, 236
Hemisphere Communications
Committee, 121
Henggler, Henri, 75
Hertslet, Joachim G. A., 87-89
Hess, Rudolf, 203, 222
Hill, James J., 98, 168
Himmler, Heinrich (Gestapo
chief): AO and, 213,218,219,
222, 225; Bedaux and, 202;
BIS and, 39; Chase Bank and,
41; Davis Oil and, 83, 85, 87,
89; GAF and, 153; GM and,
189, 196; ITT and, 118, 132
Hitler, Adolf: AO and, 213-14,
217-18, 219, 222; BIS and,
23-24, 32; Chase Bank and,
42, 46; Davis Oil and, 85, 88;
Du Ponts and, 192, 195;
Farben and, 218; Ford and,
175-77, 189, 193; France
and, 204, 206; GAF and, 153;
GEand, 244; GM and, 182-
83, 187, 191-92, 194; Hohen-

INDEX

289

lohe and, 224; Ibn Saud and,
99-101, 104; ITT and, 114,
118-19, 131-33; Jewish

financial aid to, 155; Jewish
power as viewed by, 99; Lind¬
bergh and, 178; Mein Kampf
176; plots against, 31, 132—
33, 213, 218; Standard Oil
and, 55; Windsors and, 201,
203, 205

Hoagland, Warren E., 62
Hoefken-Hempel, Anny, 202
Hohenlohe, Princess Mabel, 217
Hohenlohe, Princess Stefanie,
213-32; husband of, 215
Holland National Bank, gold
looted from, 23, 38, 233 n.
Holt, Senator Rush D., 93, 157
homosexuality, public officials
charged with, 104-108
Hoover, Herbert: AO and, 221;
Farben and, 163, 164; GAF
and, 152; postwar report of,
245

Hoover, J. Edgar (see also FBI):
AO and, 217-19, 221-32;
Aramco and, 105-107; Be-
daux and, 209; Chase and,
45-46; Davis Oil and, 88-90;
Farben and, 169; GM and,
193—95; homosexuality im¬
puted to, 105; ITT and, 117,
132; Windsor and, 204
Hopkins, Harry L., 100, 159
hops, German franchise in, 86
House Un-American Activities
Committee (HUAC), 246
Howard, Frank A., 57-58, 66, 67,
72-73, 74, 82

Howard, Graeme K., 181, 195,
238

Hubbard, Father Bernard R.,
154-55

Hudek, Karel, 11
Hull, Cordell (secretary of state):
Bedaux and, 209; BIS and.

26, 30, 36; Chase and, 50;
Davis Oil and, 89; Farben
and, 234; GM and, 193, 198;
ITT and, 116, 117, 129; Stan¬
dard Oil and, 59-60, 62, 64,
74, 78-81; Welles and, 106
Hull, Lyttle, 219, 223
Hungary, BIS loans to, 31

Ibn Saud, Abdul-Aziz, 100-104,
109

Ickes, Harold L. (secretary of the
interior): Aramco and, 102—
104; GM and, 193; Standard
Oil and, 63-69, 74, 81; Texas
Company and, 96; Windsors
and, 206

I.G., see American I.G. Chemical
Corp.; Chemie (I.G.); Farben
(I.G.) industrial trust

Ilgner, Max (of Farben): AO and,
213, 216; GAF and, 151, 154,
162, 164; postwar role of,
234, 236; Texas Company
and, 96

Ilgner, Rudolf, 154, 157, 158, 234

Immigration and Naturalization
Service, 210-11,219-20, 223,
227-30

Imperial Chemical Industries, 27

Industria Electre-Ace Palngt, 123

In Fact (newsletter), 189

Ingles, Major General Harry C.,
135

Inglessi, Jean, 77-78

International Jew, The (Henry
Ford), 175-76

International Monetary Confer¬
ence (Bretton Woods, 1944),
34—40

International Telephone and Tel¬
egraph Corporation (ITT;
see also Behn, Sosthenes;
Westrick, Gerhardt), 113-

290

INDEX

International Telephone (Cont.)
35; Acheson and, 120; BIS
and, 115; Chase Bank and,
41; Davis Oil Company and,
115; Farben and, 115, 133;
Ford Motor Company and,
115, 117-18; GAF and, 158;
GM and, 115, 116, 188, 191,
192; Nazi arrangement with,
118; postwar role of, 238,
243, 245; SKFand, 137, 142;
SS and, 152; Standard Oil
and, 57, 1 15, 133; Sterling
and, 115, 116; systems of,
201; U.S. arrangement with,
120

International Trading Company,
45

In the Center of Things (Einzig),
28

Inverforth, Lord, 85
Iran, Hitler and, 100
Iraq, Hitler and, 100-104
Italcable, 124, 126
ITT, see International Telephone
and Telegraph Corporation

Jackson, Robert H. (attorney gen¬
eral): AO and, 222, 224, 226;
Davis Oil and, 89; GAF and,
157; at Nuremberg, 233
Jacobs, John R., Jr., 70-71, 72
Japan: American and British war¬
time trade with, 33, 55; BIS
in, 82, 116; ITT in, 133; RCA
in, 133; Standard Oil in, 55,
67

Jews (see also anti-Semitism;
Auschwitz); Arab and Ger¬
man hatred for, 99-100;
Chase Bank and, 46, 48;
gold looted from, 23, 38-40;
Hitler’s financial aid from,
155; Hitler view on power
of, 99

Johnson, Herschel, 144, 146, 149
Jones, Jesse H. (secretary of com¬
merce): Davis Oil and, 93,
100, 109-11; ITT and, 121;
Roosevelt and, 100; SKF
and, 141; Standard Oil and,
60, 63, 65, 67, 68
Jones, Walter A., 85
Judson, Franklin S., 142
Junkers propulsion systems, GM
and, 196

Justiano, Mario, 170-71

Kaufman, Samuel H., 110-11
Keilhau, Wilhelm, 33-34
Kennedy, Joseph J. (U.S. ambas¬
sador to England): GM and,
189-91; Standard Oil and, 57;
Windsors and, 204
Kennedy, Robert F., 246
Keppler, William, 103, 114, 153
Kern, Gordon, 243
Keynes, John Maynard, 34, 36,
37

Keynes, Lydia Lopokova, 34, 36
Khalid Al-Hud A1 Qarqami, 99
Kilgore, Senator Harley, 238,241,
244, 245

Killinger, Baron Manfred von,
188-89

Kimball. Harry M., 224
Kirby, John Henry, 187
Knapp, Lawrence, 123
Knieren, August von, 82
Knowlton, Hugh. 122-23, 129
Knox, Franklin (secretary of the
navy), 66

Knudsen, William S. (GM presi¬
dent), 183-84, 186
Kohn, Charles, 164
Krauch, Carl (of Farben), 151;
Ford and, 176-79; GM and,
183

Kreuger, Kurt, 236-37
Kreuter, Alexander, 243

INDEX

291

Krupp Works: early Nazi financ¬
ing by, 183; GE and, 244;
Goring’s Four Year Plan
and, 152; postwar influence
of, 245; Standard Oil and, 77
Kugler, Hans, 236-37
Ku Klux Klan, 186
Kupper, Gustave, 236-37

Ladd, D. M., 226
La Follete, Senator Robert M., Jr.,
70

Lamont, Thomas, 185
Landon, Alfred M., 186
Langer, Senator William, 109
Lapham, John H., 98
Larkin, Joseph J., 41-52
L.A.T.I. airline, 59-60, 73,91, 225
Laval, Pierre, 207-209
La Varre, William, 59-60, 161
Lee, Higginson and Co., 29
Lee, Ivy, 54-55
Lee, Senator Josh, 92-93
Leibowitz, Samuel, 107-108
Lend-Lease program, 67, 93, 100
Leopoldskron Castle, 214
Lerner, Max, 211
Lesto, George, 179-80
Les Trois Rois, 31
Levinson, Charles, 196-97, 199
Lewis, John L., 85, 87, 89, 91-92,
94

Liberty magazine, 201
Life magazine, 95
Lilienfeld company, 182
Lindbergh, Charles, 92, 177-78,
220, 224

Lindemann, Karl, 41, 113, 132—
33, 239

Lindsay, Sir Ronald, 203
Link, The, 201-202, 205
Lionel (cargo ship), 144
Lipkowitz, Irving, 70
Littell, Norman, 65-66, 167,

171-73

Little, John, 230-31
London bombing, Standard Oil
and, 55

London News Chronicle, 143
Long, Breckinridge (assistant sec¬
retary of state): AO and, 226;
Ford Motor Company and,
179, 181; ITT and, 119,
126-30

Lublin company, 39
Luer, Carl, 196

Luftwaffe: SKF and, 137; Stan¬
dard Oil and, 55-57
Lundeen, Ernest, 157

MacArthur, General Douglas,
185

MacGuire, Gerald, 184
Mack, John E., 159
Maloney, William Power, 110
Man Called Intrepid. A (Steven¬
son), 93, 216-17
Manchester Guardian. The, 177
Mann, Henry, 114
Mann, Rudolf, 165, 167
Mann, Wilhelm, 162
Markham, James E., 161
marks, U S. wartime sale of, 43,
51

Marshall, Verne, 92

Martin, James Stewart, 238-45;

All Honorable Men. 239-40
McClintock, Earl, 162, 165-66,
167, 169, 171
McGarrah, Gates W., 24
McGohey, John F. X., 51
McGowan, Sir Harry, 205
McGuire, Matthew F., 221-26
McIntyre, Marvin, 106
McKittrick, Thomas H., 23-24,
29-41, 233; family of, 29,
35

McLarin, H M., 74-75
Meader, George, 243-45
Meili, E. H., 44

292

INDEX

Mein Kampf (Hitler), 176
Messersmith, George S., 90, 187-
88. 194

methanol, wartime restrictions on,
72

Mexican Telephone and Tele¬
graph, 121-22

Mexico, Davis Oil Company of,
83-94

Meyer, Emil, 29
Meyer, Julius P., 155
Middle East Supply center, 100
Milch, General Erhard, 213
Miles, Sherman, 217
Miller, Colonel Ffancis P., 244
Mills, Sir Percy, 236
Mitchell, Charles E., 151
Moffett, James, 98-100, 108-11
Moll, Alfredo E., 157, 160, 163
Moll, Jose O., 182
Monckton, Sir Walter, 206
money world community,
Schacht’s concept of, 151
Montgomery, General Bernard,
75

Mooney, James D. (GM Euro¬
pean head), 116, 187-98,217
Moral Rearmament Movement,
203

Morgan, Grenfell, 189
Morgan, J. P., 114
Morgan Bank, 48, 184-85, 189,
206

Morgan family, 23-24
Morgenthau, Elinor, 25, 36
Morgenthau, Henry (secretary of
the treasury); BIS and, 24-
30, 33; at Bretton Woods, 35-
37; Chase Bank and, 45-46,
49-51; Da vis Oil and, 88, 90,
94; Farben and, 168-70; Ford
Motor Company and, 181—
82; GAF and, 158-60; GM
and, 197; ITT and, 119, 120;
postwar work of, 235, 246;
SKF and, 140-41, 149; Stan¬

dard Oil and, 57, 60, 62, 63,
76, 78; Windsors and, 206
Morgenthau Plan, 235
Mouvement Synarchique Revolu-
tionnaire, 48
Muccio, John J., 60, 74
Munn, Gurnee, 217
Murphy, Robert D., 32, 208-209,
235, 237

Mussolini, Benito, 89, 99

Nation, The, 108, 160, 210, 211
National Cash Register, 245
National City Bank of New York
(NCB): Chase and, 41, 46;
Davis Oil and, 83; Farben
and, 162, 167; GAF and, 152,
155, 157-58, 160; ITT and,
41, 114, 125, 130; SKF and,
142

National Council of Clergymen
and Laymen, 187
National War Labor Board, 68
Nazi Germany (see also Ger¬
many): American and British
wartime trade with, 33;
Chase Bank and, 41-52; ITT
and, 118, 130-33; marks sold
in U.S. by, 43-45; RCA in,
133

Nazi Winter Help Fund, 123
NBC, 124-25

NCB, see National City Bank of
New York
Nelson, Donald, 139
Neutrality Act, 89
Newcomer, Dr. Mabel, 35
Newsom, Earl, 73
New York Daily News, 117
New York Evening Mail , 163
New York Guaranty Trust Bank,
48

New York Post, 107
New York Sun, 221

INDEX

293

New York Times, The , 52, 68, 80,
82, 116, 131, 171, 182
New York World, 24
Niedermann, Carlos, 46-50
Niemeyer, Sir Otto, 29-31
Nippon Electric Company, 122
Nixon, Russell A., 235-38, 242
No Foreign Wars Committee,
92-93

Noramco, 238

Norman, Montagu, 27-30, 205
North African invasion, BIS and,
32-33

Norway: at Bretton Woods, 33-
34, 40; SKF strike in, 149
Nuremberg trials, 38-40, 173,
232, 233

N.W.7. (Farben spy network), 57,
153-56, 162, 236
Nye, Gerald P„ 107

Oberg, Major General Karl, 208

O’Dwyer, William, 106

Office of Economic Programs, 140

Office of Strategic Services (OSS),
43, 146, 238

O Globo (Brazilian newspaper),
225

Ohnesorge, Wilhelm, 118, 132,
196, 207

oil, international wartime trade in:
by Davis Oil Company, 93;
by Standard Oil, 58-59, 72-
82; by Texas Company, 96-
104

OKW (Nazi armed forces high
command), 132

Opel works (GM subsidiary), 183,
187, 192, 196

Oppenheimer, Waldemar, Baron
von, 103

Organization of Germans Abroad,
see AO

Orient Gruppe, 213

O’Rourke, Joseph, 230
OSS, see Office of Strategic Ser¬
vices

Oursler, Fulton, 201
Ozalid company, 153

Pajus, Jean, 140, 143, 149
Panama: Chase Bank in, 45, 52;
SKF vessels registered in,
142; Standard Oil German
ships registered in, 59
Pan American Airways, 91, 95
Papen, Franz von, 103, 153
Paramount Studios, 145
Patents for Hitler (Reimann), 42
Patterson, Robert P., 144-45, 148,
244

Patton, General George S., 235,
241

Paul, Randolph, 33
peanut oil. North African pipeline
for, 207

Pearson, Drew, 117, 222
Pease, H M., 124
Pell, Hamilton, 94
penicillin, trading of, 245
Perkins, Milo R., 60
Petain, Marshal Henri, 104, 206
Peters, Carl, 237
Petrola (Swiss syndicate), 76
Petroleum Times, The, 239
Phillips Milk of Magnesia, Farben
and, 162

Pico I and Pico II (Danube
barges), 77

Pieper, N.J.L., 218, 222-23
Pillsbury, Colonel E. I., 235
Pincemin, Henri, 128
Pinkerton Agency, 187
pipeline, North African, 207
PM, 35, 146-47, 160, 211
Poland, BIS loans to, 31
police power, financiers’ emphasis
on, 201

294

INDEX

Poole, Charles, 186
Portugal, wartime trading in, 46
Poteat, Douglas, 146
Potsdam Agreement, sabotage of,
241-42

Pratt Whitney, SKF and, 142
Probst, Otto, 86

Proclaimed List: ITT and, 123;
SKF and, 137, 140, 147, 149;
Standard Oil and, 60-61, 79-
80; Sterling and, 170-73
Pucheu, Pierre, 32, 180
Puhl, Emil (of BIS), 23, 26, 29, 30,
32, 37-40; Chase and, 41-42,
46-47, 50; Davis Oil and, 87;
GM and, 189-90; Ibn Saud
and, 99-100; ITT and, 114,
115; postwar findings on,
241-42

Puleston, Lieutenant James, 145
PYL (Chile radio station), 125

Quebec Conference, 234

Rachid Ali El-Kilani, 103
Radiobras, 125-26, 130
Raeder, Admiral Erich, 87
Raskob, John Jacob, 183
RCA (Radio Corporation of
America), 121, 124-25, 127-
35; Beyond Our Shores the
World Shall Know Us, 132
Reagan, Daniel, 75-77
Redman, Joseph R., 133-35
Reed, Philip D., 244
Reichsbank: BIS and, 23-24, 26,
29, 30-31; Chase Bank and,
41-44, 45-46, 50; Davis Oil
and, 85; Ibn Saud and, 99;
ITT and, 115; postwar treat¬
ment of, 237, 241—42; SKF
and, 138

Reimann, Gunther, Patents for
Hitler , 42

Reinhardt, Max, 214
Remington company, 186
Ribbentrop, Joachim von (Nazi
foreign minister): AO and,
215; Arab world and, 99;
Davis Oil and, 83; GAF and,
156-57; GM and, 189, 193;
ITT and, 115
Richter, George, 128
Riddleberger, John, 195
Rieber, Torkild “Cap’* (of Texas
Company), 95-98; GM and,
192; ITT and, 115-17; as
Nazi-English go-between,
217

Riefler, Winfield, 143
Ringer, Fritz, 57
Rio Conference, 127
Rios, Fernando de los, 42
Rockefeller, Avery, 43
Rockefeller, John D., 41, 53
Rockefeller, John D. II, 69, 73
Rockefeller, Nelson, 60-61, 79/t.,
121

Rockefeller family: BIS and, 24;
Chase National Bank and,

40- 41; corporations owned
by, 41; Nazi government and,

41- 52; Standard Oil and, 53,
66, 69

Rodd, Francis, 189
Rodgers, William Starling Sulliv-
ant, 98, 102-103, 110
Rogers, Edward S., 164
Rogge, O. John, 94
Rommel, General Erwin (German
commander in Africa), 100;
Ford trucks used by, 180;
pipeline for use of, 207
Roosevelt, Eleanor, 25, 203-204,
232

Roosevelt, Franklin D.: AO and,
221, 227, 232; Aramco and,
96, 102, 103, 105-106, 107,

INDEX

295

109; Baruch and, 72; Davis
Oil and, 85-86, 87-92;

Farben and, 234; GAF and,
156, 157-59, 161; GM and,
184-85, 190-93; Ickes and,
63-65, 68; ITT and, 121, 133;
Morgenthau and, 25; Nazi
consulates and, 223; plots
against, 91-92, 184—86; post¬
war plans of, 234—35, 246;
SKF and, 173; Welles and,
105-106; Windsors and, 203-
204

Rooth, Ivar, 31

Rosen, Hugo von (Goring cousin),
137-42, 147, 148, 149
Rothermere, Lord, 214-15, 222,
230

Royal Air Force (RAF); Ford
Motor Company bombed by,
179-81; royalties paid to
Nazi Germany by, 55
Royal Dutch Shell Group, 54, 239
Royalist party, Hitler overthrow
planned by, 218
Ruark, Robert, 232
rubber, international wartime
trade in, 57, 71-72, 242
Rubber Reserve Company, 72
Rubinstein, Serge, 92, 94
Ruckwanderer scheme, 44, 51
Rumanian Iron Guard, Farben
and, 58

Rumely, Edward A., 163

Sacks, Alexander, 245-46
Sahara, plans for development of,
207-208

Sanders, Alexander, 238
Sandstede, Gottfried, 225
Samoff, Colonel David, 124—25,
127-30

Saudi Arabia, oil deals with, 98-
104, 109

Savourin, C. F., 79

Schacht, Hjalmar Horace Greeley
(Nazi minister of economics;
Reichsbank president): BIS
and, 23; Davis Oil and, 85;
GAF and, 151; GM and, 188;
Hitler overthrow plotted by,
31; at Nuremberg, 233; poli¬
cies and beliefs of, 32, 35;
world money community
concept of, 151

Schecklin, Commander George,
128

Schellenberg, Walter (SD head):
AO and, 213; GAF and, 153—
54; Hitler overthrow plotted
by, 218; 102-103; Ibn Saud
and, 102-103; ITT and, 113,
118, 132-33; Windsors and,
206

Schmidt, Orvis A., 37-40

Schmitz, Dietrich, 116, 151-52,
154, 155, 157, 234

Schmitz, Hermann (Farben joint
chairman), 162, 166; AO and,
213, 215; Bedaux and, 202;
BIS and, 24, 26, 27, 82; Davis
Oil and, 83, 85; Ford and,
178; GAF and, 151-55, 157-
58; GM and, 183-84; Hitler
and, 239; postwar status of,
234, 240-41, 245; Standard
Oil and, 54-55, 58; Texas
Company and, 96

Schofield, Major Lemuel, 211,
219-31

Schroder, Baron Bruno von, 41,
43

Schroder, Baron Kurt von: Arab
oil and, 103; Bedaux and,
203, 209; BIS and, 24, 26, 29,
32, 37; Chase Bank and, 43;
Davis Oil and, 85; Farben
and, 166; Ford and, 176;
GAF and, 152-53; GM and,
184; ITT and, 113-115, 118

296

INDEX

Schroder, Rockefeller and Com¬
pany, Investment Bankers:
Bcdaux and, 203; Chase and,
43-45; Davis Oil and, 83;
Ford Motor Company and,
180; Standard Oil and, 69
Schroder (J. Henry) Bank: Chase
Bank and, 42-44; Davis Oil
and, 83; Farben and, 166;
GAF and, 160

SD (Gestapo counterintelligence
service; see also Schellenberg,
Walter), 153, 213
Sears, Roebuck, 139
Securities and Exchange Commis¬
sion (SEC), 55, 142, 166
(SECC) Securities and Exchange
Control Commission, 170
Selbourne, Lord, 144
Seldes, George, 189
Separator company, 142
SFI (Farben subsidiary), 168
SGE, see Standard Gas and Elec¬
tric

Shell Oil Company, 54, 85
Siemens company, 124, 128, 142
Siering, Werner, 169-70
Siling, Phillip, 128
Simon, Sir John, 27-28, 32
Singer sewing machine company,
245

SKF (Swedish Enskilda Bank),
137—50; Acheson and, 143—
44, 145, 149; anti-Semitism
at, 142; Chase Bank and, 41;
Farben and, 139; Ford and,
137; GAF and, 139; ITT and,
137, 142

Sloan, Alfred P., 74, 183, 187, 195
Smit, Leonard J., 45, 49-51
Smith, Congressman A1 (of Wis¬
consin), 173
Smith, Ben, 204
Smith, Gerald L. K., 187
Smith, Lawrence, 122
Social Justice magazine, 20In.
Sorenson, Charles E., 180, 182

South America, international war¬
time trade in: by ITT, 121—
31; by SKF, 142; by Standard
Oil, 60-75; by Sterling Pro¬
ducts, 162-63; Welles’s
knowledge of, 104
Spaatz, General Carl, 143
Spain, Chase Bank in, 42, 46
Spencer, Richard, 244
SS, 40, 152, 189
Standard Electrica, 120
Standard Gas and Electric (SGE),
160, 161

Standard Oil, 53-83; Acheson
and, 61-62, 76-77, 81;

American I.G. and, 54-55,
57; Bank of England and, 80;
Bank of France and, 80; Berle
and, 60; BIS and, 40, 79;
Chase Bank and, 53, 78;
Farben and, 54-58, 67-71,
72, 74-75, 76-77, 79, 82,
239-40, 245; GAF and, 160;
Hitler plot and, 132-33; ITT
and, 57, 115, 133; SS and,
152; systems of, 201
Standard Oil of California, 95, 152
Standard Oil of New Jersey, 41,
43, 46, 152
Starnes, C. R., 71-72
Stein (J. H.) Bank of Cologne, 24,
83, 152, 166

Stephenson, Sir William, A Man
Called Intrepid. 93, 217
Sterling Dyestuffs, 163
Sterling Products: Chase Bank
and, 41; Farben and, 155,
161-73; Ford family and,
163; ITT and, 115, 116; sys¬
tems of, 201

Stewart, James B., 193-94
Stimson, Henry L. (secretary of
war), 144, 154, 166
Stockholm Enskilda, 138
Stockton, Kenneth, 133
Stone, I. F., 78-79, 160-61, 172,
211

INDEX

297

Strakosch, Sir Henry, 28
Strauss, George, 27-28, 32
Strezlin, Harvey, 107
Stuart, Sir Campbell, 128, 129
Stulpnagel, General Otto von, 207
Sullivan and Cromwell law firm,
30, 43, 175

Sulton, Lt. General Dan I., 244
Sweden: GM in, 197; SKF and
government of, 137
Swedish Enskilda Bank, see SKF
Swint, Wendell R., 183
Swiss National Bank, 35, 38-40,
241-44

Swiss Standard, 75-80
Swope, Herbert Bayard, 219, 221
synthetic rubber agreements, post¬
war findings on, 242

Talmade, Eugene D., 187
Tamm, Edward A., 222-25, 230
Tawresey, J. S., 141-42
Teagle, Walter C. (Standard Oil
chairman), 53-56, 58, 63-65,
68-70, 74, 79; AO and, 215;
Bedaux and, 202; family of,
73; Farben and 163; GAF
and, 152, 155; Schacht and,
85; ship named for, 56; SS
and, 152
Telefunken, 124

Telegrafica y Telefonica del Plata
(TTP), 124-25

Telephone and Radio (ITT Swiss
and Spanish subsidiary), 120
tetraethyl lead, international trad¬
ing in, 55, 239, 243
Texas Company, 95-98, 103, 115,
116, 117, 201
Texas Oil of Arizona, 96
Thayer, Phillip W., 170
Thiele, General Fritz, 118, 132,
238

Thomsen, Hans, 117, *156, 193,
219

Thornburg, Max, 64-65
time and motion study, effects of,
201

Time magazine, 43
Tippleskirsch, Baron von, 188-89
Titanic, Samoff and, 124
T-men (U.S. Treasury agents),
241-43

Tobey, Charles W., 35
Toledano, Vincente Lombardo, 86
Trading with the Enemy Act, 51,
62, 119, 179

Transradio Consortium, 40,
124-30

Trans-Saharan Railway, 207
Truman, Harry S: Aramco and,
108-109; Farben and, 167;
postwar policies of, 235, 243,
244, 245, 246; Standard Oil
and, 67-70, 73; Welles and,
106; Wheeler and, 94
TTP, see Telegrafica y Telefonica
del Plata

Tuck, S. Pinkney, 208
tungsten, international trade in,
81, 244

Tyler, L. L., 194-95

U-boats, SKF and, 137
Underwood company, 117
Union of Soviet Socialist Repub¬
lics (USSR): Farben postwar
status in, 243; Hitler and,
99

United River Plate Telephone
Company, 123

U.S. Army Signal Corps, 243
U.S. Censorship Office, 141
U.S. Coast Guard, 228
U.S. Commerce Department (see
also Jones, Jesse H.): GAF
and, 161; Standard Oil and,
60-61

U.S. Commercial Company, 117,
121, 123, 129

298

INDEX

U.S. House of Representatives:
GAF and, 156-57; Un-
American Activities Com¬
mittee of, 246

U.S. Interior Department (see abo
Ickes, Harold L.), 63-70, 74,
81

U.S. Justice Department (see abo
Arnold, Thurman; Biddle,
Francis; Cummings, Homer
S.): AO and, 221; Chase Bank
and, 49; Standard Oil and,
65-69; Texas Company and,
109

U.S. Military Government Cartel
Unit (see abo Nixon, Rus¬
sell), 235, 243

U.S. Military Intelligence: FBI
and, 209; GAF and, 153; ITT
and, 131; Standard Oil and,
60

U.S. Naval Intelligence, homosex¬
ual brothel raided by, 106-
107

U.S. Navy Department (see abo
Knox, Franklin): SKF and,
147-48; Texas Company and,
109

U.S. Senate, 156-57; Antitrust
Committee, 70; Defense
Committee, 167; Military
Affairs Committee, 40; Pat¬
ents Committee, 69-73, 172;
War Investigation Commit¬
tee, see Kilgore, Harley

U.S. State Department (see abo
Acheson, Dean; Berle, Adolf;
Dulles, John Foster; Hull,
Cordell; Welles, Sumner): an¬
ti-Semitism in, 104; GAF
and, 155; postwar role of,
243; SKF and, 148; Standard
Oil and, 62

U.S. Steel Corporation, postwar
influence of, 245

U.S. Treasury Department (see
abo Morgenthau, Henry):

BIS and, 40; Chase Bank and,
49; GAF and, 158; postwar
activities of, 241-43, 246;
SKF and, 147-48; Standard
Oil and, 61-62

U.S. War Department (see also
Stimson, Henry L.): SKF
and, 147; Standard Oil and,
61

Valtin, Jean, 222
Vanderbilt, Harold S., 23
Vatican: North African invasion
and, 82-83; Roosevelt and,
191

Vichy Algiers, Ford plant in,
180-81

Vichy France, Hitler and, 204
Vodka-Cola (Levinson), 196-97
Volkswagen, GM and, 189
Voorhis, Congressman Jerry: BIS
and, 33; Sterling and, 173;
Windsors and, 206

Wachter, W. B., 197
Waldman, Henry, 80
Wallace, Henry, 64-65, 101, 121
Wallenberg, Jacob, 121, 138, 143,
145-46, 149

Wallenheim, Baroness Ingrid von,
116

Wall Street Journal, The, 138
Walsh, David I., 101, 107-108
War Petroleum Board, 64, 69, 70,
75-76

War Production Board, 137,
139-42

Warren, Fletcher, 193-94
Washington Post, The, 147
Washington Times Herald, 224
Watson, Major General Edwin M.

(“Pa"), 88, 105, 204
Weber, Ernst, 35, 38

INDEX

299

, Webster, Edwin S., 178
Wehrle, Ema, 87, 90, 93
Weiss, William E., 54, 116, 155,
162-69

Weizsacker, Baron Ernst von, 205
Welles, Sumner (of State Depart¬
ment): GM and, 192, 195;
policies of, 104; at Rio Con¬
ference, 127; sex problems of,
104-105; Standard Oil and,
60, 80-81

Wenner-Gren, Axel (of Elec¬
trolux): Goring and, 87, 94;
ITT and, 121; as Nazi-
English go-between, 217;
SKF and, 138, 142; Windsors
and, 198

West India Oil Company, 74
Westrick, Gerhardt (ITT chief in
Germany), 113-18, 123, 133,
135; Ford and, 175-77, 178;
GM and, 192-93; postwar ac¬
tivities of, 238, 243; Texas
Company and, 98
Weygand, Maxime, 206
Wheeler, Senator Burton K.: GM
and, 188; isolationism of,
107-109; ITT and, 133-35;
Nazi sympathies of, 91-93,
224

White, Harry Dexter (assistant
secretary of the treasury):
BIS and, 25, 26, 34, 37; Chase
Bank and, 46-47, 49, 51;
HUAC and, 246; ITT and,
120; Morgenthau Plan and,
234-35; Standard Oil and, 63
White, William Allen, 156
Wiedemann, Fritz (Nazi diplo¬
mat): AO and, 213-25, 230,
232; Bedaux and, 201, 202-
203; GAF and, 154; ITT and,
115

Wilkinson, H. A., 101
Williamson, Hugh, 137, 242-43
Willkie, Wendell, 23, 91
Winant, John G. (U.S. ambassa¬
dor to England): BIS and, 30;
Ford Motor Company, 182;
GM and 197; ITT and, 120;
postwar role of, 235; SKF
and, 143; Standard Oil and,
77-78

Winchell, Walter, 117, 221, 225
Windsor, Duke and Duchess of,
138, 198, 201-206, 215
Wingquist, Sven, 138, 143
Winter, Eduard, 193, 195-96
Winterbottom, W, A., 128-30
Winthrop Chemical, 160, 162
Wiseman, Sir William, 217-21,
226

Witty, Fred C., 52
Wohlthat, Helmuth, 87, 89,

189-92

Wojahn, Max, 164, 167
wolfram, international trade in, 81
Wolverine Republican League,
186

Wood, Sir Kingsley, 31-32, 77-78
Worms Bank: Bedaux and, 203,
205-206; BIS and, 32; Chase
and, 43; Ford and, 178, 180;
postwar activities of, 243
Wyzanski, Charles E., 82

Yalta Conference, 235
Yingling, R. T., 119
Young, Owen D., 24

Zech-Burkersroda, Count, 205
Zingg, Gustav, 61, 79

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